Multifamily Sector Showing Stability

“Steady as she goes” could be the multifamily sector’s mantra. Analysts report stable apartment vacancy and rent growth rates in the first quarter.

The apartment vacancy rate remained unchanged at 4.8 percent in the first quarter, said Reis Chief Economist Barbara Byrne Denham. She noted occupancy growth and supply growth were both “subdued.”

In another sign of stability, the apartment vacancy rate equaled 4.7 percent in first quarter 2018, the Reis first quarter Apartment Sector Trends report said.

“Occupancy should stay consistent with both supply growth and job growth, but the pent-up demand for buying a home could impact some markets more than others,” Byrne Denham said.

Vacancy increased in only 15 of the 79 metros Reis tracked during the quarter. For the past 12 months, 42 metros have higher vacancy, but no metro saw a decline in rent, Byrne Denham said.

Overall, U.S. multifamily rents increased a mere $4 in March–less than one-half of a basis point–to $1,430. Year-over-year rent growth was slightly less than the same period in 2018, reported Yardi Matrix, Santa Barbara, Calif.

“The numbers demonstrate consistent growth, although not as strong as other first quarters in recent years,” the Yardi Matrix Multifamily National Report said. “Still, the market’s consistency remains a point in its favor.”

Yardi Matrix said Las Vegas and Phoenix continued to top the nation for rent growth in March on a year-over-year basis with 7.5 percent and 7.2 percent rent growth respectively over the last 12 months.

“For multifamily, it’s a small world, after all,” Yardi Matrix said. “At least lately. As the market’s cycle advances, rent increases are dominated more and more by secondary and tertiary markets that are producing a disproportionate share of economic and population growth, and where rents are low enough that they can be raised without overly burdening tenants.”