Multifamily Rents Chill in October
- Nov 16, 2017
October spread its autumnal chill over many parts of the country as well as the real estate industry, as average U.S. monthly rents fell $4 during the month, down to $1,358, according to Yardi Matrix’s monthly report on 121 metro areas. The nationwide deceleration reported during the last few months continued, with rents declining 30 basis points from September. On a year-over-year basis, October 2017 rents were 2.3 percent higher than they were last year at the same time.
“Overall, the drop on a national level is no surprise. It comes at the beginning of the fourth quarter, when rent growth tends to slow due to seasonal factors,” according to the report. In addition, the multifamily industry is still slowing down from record highs experienced in 2016. On a national level, rents are only $5 less than their all-time peak in August, and $30 more than a year ago.
Some metros, however, don’t seem to be affected by the industry’s long-feared downturn. Cities like Sacramento, where rents increased 7.9 percent year-over-year, which amounts to a considerable 260 basis points more than its nearest competitor, show no signs of slowing down. Similarly, Las Vegas, with a 5.3 percent increase in rents, reached second place in the Yardi Matrix rankings after seeing a strong past few months. Amid some strong performance is the eventual downturn of markets that were previously topping the charts, specifically in the Pacific Northwest. Seattle, for example, achieved only 3.7 percent growth in October and fell from second place in Yardi’s rankings to sixth. According to the report, the region’s deceleration is exemplary of the national slowdown, caused in part by overbuilding of luxury communities.
While some successful metros seemingly can’t be touched and others are slowly feeling the repercussions of overbuilding, others are recovering from the aftermath of the recent natural disasters. October marked the first month that the impact of Hurricane Harvey on Houston’s multifamily stock could be measured. The survey reports that more than 45,000 apartment units and 100,000 housing units are out of commission as a result of hurricane damage. However, rent growth increased in Houston 0.8 percent year-over-year as of October, which equates to a 100-basis-point improvement compared to its -0.2 percent growth in September. October 2017 marks Houston’s first positive month for rent growth since July 2016.