Effective rents for new leases of U.S. apartments climbed 1.0 percent during the third quarter and 3.3 percent during the 12 months ending in September, according to MPF Research, an industry-leading market intelligence division of RealPage, Inc. (NASDAQ: RP). The annual rent growth pace has slowed throughout 2012 after the rate of increase reached 4.8 percent at the end of last year. MPF Research analysts highlight the nation’s latest apartment rent growth statistics as well as other key performance indicators in a discussion at www.realpage.com/MPFQ3-2012-Report.
Annual rent growth a little over 3 percent, while slightly above the long-term historical norm, is similar to the average results posted during past periods when occupancy was sustained at strong levels, according to MPF Research. Comparable price increases registered most recently from 2005 through the middle of 2008, and before that in the middle to late 1990s.
“Property owners and operators are becoming a little more conservative than they have been in pushing rents due to more mobility in the resident base,” said Greg Willett, MPF Research vice president. “People are simply beginning to move around more than they did over the past few years.” Reasons include:
- Some households are opting for the new product that’s beginning to be delivered in modestly larger numbers;
- Some households are moving down in product quality due to affordability constraints;
- Rental single-family homes are proving attractive to some households; and finally
- Loss of renters to purchase, while still very low by historical standards, is starting to head upward a little.
“With replacement renters readily available to backfill any lost residents, occupancy figures remain very high,” Willett said. “However, the renter churn does mean that there has to be more total leasing activity than would take place without folks moving around. Unit turnover does tend to make those running apartment communities somewhat less aggressive in their pricing decisions.”