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Weaker Housing Market Drives Growth in Apartment Sector
A weaker national housing market continued to benefit the apartment market, according to research by Reis. The apartment vacancy rate was unchanged at 4.8% in the fourth quarter, compared to 2017 when it was 4.6%, while at year-end 2016 it was 4.2%.
Asking and effective rent growth was 0.8% in the quarter, decelerating from 1.4% and 1.3%, respectively, last quarter. At $1,440 per-unit (market) and $1,370 per unit (effective), the average rents have increased 4.9% and 4.6%, respectively, from the fourth quarter of 2017.
Reis Senior Economist Barbara Byrne Denham notes, vacancy increased in 40 of 79 metros in the quarter, while three metros saw a decline in effective rent. For the year, 52 metros have higher vacancy, but no metro shows a decline in rent and many show robust growth.
Net absorption was 39,732 units, lower than the previous quarter’s absorption of 50,502 units, and below the average quarterly absorption of 2017 of 46,926 units. Reis reports construction was 49,944 units, also below the third quarter’s 62,313 units and below the 2017 quarterly average of 61,869 units.
Metros with the highest vacancy rate increase include Albuquerque, Lexington, Nashville, Charleston and Denver. Metros with the highest net absorption have had some of the highest job growth in 2018: Houston, Dallas, Denver, Seattle, Orlando, Austin and Phoenix – all of which have had job growth of 2.8% or more over the year. Atlanta and Philadelphia also had strong net absorption growth with job growth of 2.0% and 1.4%, respectively, per Reis’ numbers.
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