RealPage® Reports Moderate Apartment Rent Growth for Calendar Year, Normal Seasonal Pricing Cuts in the Fourth Quarter

Occupancy remains tight, helped by demand bumps in hurricane-impacted markets

Richardson, TX – January 3rd, 2018 (BUSINESS WIRE) U.S. apartment rents climbed at a moderate pace of 2.5 percent in calendar 2017, according to real estate technology and analytics firm RealPage, Inc. (NASDAQ: RP). Nationally, typical monthly apartment rent is now $1,330.

Effective rents for new leases slipped 0.9 percent during the fourth quarter. Those slight rent cuts late in the year reflect normal seasonality, as slower leasing activity in the colder-weather months can spur housing owners and operators to offer more pricing deals.

“While the apartment rent growth pace has slowed from the performance seen a couple years ago, it’s the longevity of the current cycle that’s so impressive,” said Greg Willett, RealPage’s chief economist. “Rents have climbed substantially for eight consecutive years.”

Few local markets are experiencing the price spikes that were common in 2014-2015. Sacramento’s yearly growth is currently the strongest among the country’s bigger metros at 6.5 percent, but the California capital is the only large market posting an increase of more than 6 percent.

Two years ago, more than a dozen big metros registered rent jumps topping 6 percent, with the pace of increase reaching as high as 12 percent in Portland, Oregon, then the country’s rent growth leader. Rents in Portland climbed just 1.9 percent in 2017.

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Apartment rents held largely flat during 2017 in several of the nation’s big markets. Rent growth proved minimal at less than 1 percent across Kansas City, Nashville, San Antonio, Pittsburgh, West Palm Beach and Washington, D.C. Prices even dipped a bit in Austin, where average rent slid 0.4 percent.

Occupancy Remains Healthy

National apartment occupancy stands at 95.1 percent at the end of the fourth quarter, unchanged from the year-ago performance.

While year-end occupancy inched down 20 basis points from 95.3 percent in the third quarter, the decline is less than the normal seasonal drop of about 50 basis points that occurs when leasing activity slows as the temperature cools.

That smaller-than-typical seasonal occupancy drop reflected market tightening in a handful of locations where hurricane damage sent displaced households to the apartment stock. In Texas, occupancy jumped 140 basis points on a quarterly basis in the big Houston metro and 220 basis points in the smaller Corpus Christi market. Florida metros, which have received households leaving Puerto Rico, tended to register small occupancy increases in the fourth quarter.

“The country’s apartment market remains tight, with product availability generally limited to recently-completed properties moving through initial leasing,” Willett said. “Unless a renter can afford that expensive new stock, finding a ready-to-lease unit takes some real work in most locations.”

Among the country’s bigger markets, Minneapolis/St. Paul stays atop the occupancy leaderboard, with 97 percent of the existing stock now full.

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The Outlook Holds Stable

RealPage market analysts anticipate that 2018’s apartment performance fundamentals will register at levels very similar to the 2017 results. “Minimal shifts in momentum are expected over the coming year,” Willett said. “Apartment demand should stay very solid, but new supply will continue to be delivered at a pace that will keep leasing conditions competitive in the top-tier product niche. In turn, rent growth should remain moderate.”

“The biggest question mark for 2018 may be the construction starts volume,” according to Willett. “At this late stage of the cycle, new building sites are difficult to source, and construction costs have climbed notably. With fewer starts likely in the coming year or so, delivery volumes should fall quite a bit by 2019 and 2020.”

About RealPage

RealPage is a leading global provider of software and data analytics to the real estate industry. Clients use its platform to improve operating performance and increase capital returns. Founded in 1998 and headquartered in Richardson, Texas, RealPage currently serves nearly 12,500 clients worldwide from offices in North America, Europe and Asia. For more information about the company, visit http://www.realpage.com.

Contacts

RealPage, Inc.
Jay Board
(972) 820-4915
jay.board@realpage.com

U.S. Needs 4.6M New Apartments by 2030 to Keep Pace with Demand

Growing Demand is Due to Aging Population, Immigration, Declining Home Purchases

Washington, D.C. – June 12, 2017 (BUSINESS WIRE) Delayed marriages, an aging population and international immigration are increasing a pressing need for new apartments, to the tune of 4.6 million by 2030, according to a new study commissioned by the National Multifamily Housing Council (NMHC) and the National Apartment Association (NAA). It’s important to note that:

  • Currently, nearly 39 million people live in apartments, and the apartment industry is quickly exceeding capacity;
  • In the past five years, an average of one million new renter households were formed every year, which is a record amount; and,
  • It will take building an average of at least 325,000 new apartment homes every year to meet demand; yet, on average, just 244,000 apartments were delivered from 2012 through 2016.

Based on research conducted by Hoyt Advisory Services and commissioned by NAA and NMHC, the data includes an estimate of the future demand for apartments in the United States, the 50 states and 50 metro areas, including the District of Columbia. For the purposes of this study, apartments are defined as rental apartments in buildings with five or more units. The data are available on the website www.WeAreApartments.org.

We Are Apartments Logo

The increased demand for apartments is due in large part to:

  • Delayed house purchases. Life events such as marriage and children are the biggest drivers of home ownership. In 1960, 44 percent of all households in the U.S. were married couples with children. Today, it’s less than one in five (19 percent), and this trend is expected to continue.
  • The aging population. People ages 65-plus will account for a large part of population growth going forward across all states. The research shows older renters are helping to drive future apartment demand, particularly in the northeast, where renters ages 55-plus will account for more than 30 percent of rental households.
  • Immigration. International immigration is assumed to account for approximately half (51 percent) of all new population growth in the U.S., with higher growth expected in the nation’s border states. This population increase will contribute to the rising demand for apartments. Research has shown that immigrants have a higher propensity to rent and typically rent for longer periods of time.

“We’re experiencing fundamental shifts in our housing dynamics, as more people are moving away from buying houses and choosing apartments instead. More than 75 million people between 18 and 34 years old are entering the housing market, primarily as renters,” said Dr. Norm Miller, Principle at Hoyt Advisory Services and Professor of Real Estate at the University of San Diego. “But renting is not just for the younger generations anymore. Increasingly, Baby Boomers and other empty nesters are trading single-family houses for the convenience of rental apartments. In fact, more than half of the net increase in renter households over the past decade came from the 45-plus demographic.”

“Apartment rentals are on the rise, and this trend is expected to continue at least through 2030, which means we’ll need millions of new apartments in the U.S. to meet the increased demand. The western U.S. as well as states such as Texas, Florida and North Carolina are expected to have the greatest need for new apartment housing through 2030, although all states will need more apartment housing moving forward,” said NAA Chair Cindy Clare, CPM. “The need is for all types of apartments and at all price points.”

There will also be a growing need for renovations and improvements on existing apartment buildings, which will provide a boost in jobs (and the economy) nationwide. Hoyt’s research found that 51 percent of the apartment stock was built before 1980, which translates into 11.7 million units that could need upgrading by 2030. The older stock is highly concentrated in the northeast.

“The growing demand for apartments – combined with the need to renovate thousands of apartment buildings across the country – will make a significant and positive impact on our nation’s economy for years to come,” explained NMHC Chair Bob DeWitt. “For frame of reference, apartments and their 39 million residents contribute $1.3 trillion to the national economy. As the industry continues to grow, so will this tremendous economic contribution.”

Other highlights from the report include:

  • Demand is expected to be especially significant in Raleigh, N.C., with a 69.1 percent increase in new apartment units between now and 2030, Orlando, Fla. (56.7 percent), and Austin, Texas (48.7 percent). Also notable, the demand in the New York City metro area will call for an additional 278,634 apartment units, Dallas-Ft. Worth, Texas (266,296 new units), and Houston, Texas (214,176 new units).
  • Propensity to rent is higher in high-growth and high-cost states.
  • Hundreds of thousands of new rental units will be needed by 2030 in states such as California, Georgia, Arizona, Florida, North Carolina, Nevada, New York, Texas, Virginia and Washington.

In conjunction with the study’s release, the website www.WeAreApartments.org breaks down the data by each state and 50 key metro areas. Visitors can also use the Apartment Community Estimator – or ACE – a tool that allows users to see the trends in their state or metro area to determine the potential economic impact locally.

For more information, visit www.WeAreApartments.org.

For more than 25 years, the National Multifamily Housing Council (NMHC) and the National Apartment Association (NAA) have partnered on behalf of America’s apartment industry. Drawing on the knowledge and policy expertise of staff in Washington, D.C., as well as the advocacy power of 170 NAA state and local affiliated associations, NAA and NMHC provide a single voice for developers, owners and operators of multifamily rental housing. Today, more than one-third of Americans rent their housing and 39 million people live in an apartment home. For more information, please visit www.nmhc.org or www.naahq.org.

Contacts

Adrienne Walkowiak
(603) 659-9345
Adrienne@AdrienneWalkowiak.com

or

NMHC
Jim Lapides
(202) 974-2360
jlapides@nmhc.org

or

NAA
Carole Roper
(703) 797-0616
croper@naahq.org