Posts Tagged ‘Axiometrics’

A Look to Apartments of the Future – Millennials Will Dominate

Written by Landlord Property Management Magazine on . Posted in Blog

Shared post from Axiometrics | by Louis Rosenthal

apartments of the future

The apartment market is always changing. What was popular in the 1980s is a relic today. While today’s renters enjoy the amenities and locations featured at newer properties, changing economies, culture, technologies and interests will make the apartments of the future different.

So what does the medium- and long-term market look like? What should renters, investors and economists know about it in 2025, 2035 or even 2050? This isn’t an idle exercise: While the forces of supply and demand don’t change, the drivers of supply and demand do. In that sense, as we move farther into the future, observers should be keen to demographic and generational changes, technological disruptions and shifting market dynamics.

Starting with demographic and generational changes, the prime renter age group for the next decade or more will be that much-discussed millennial generation. We consider the prime-renter group to include those ages 20-34. If we consider millennials to be anyone born between 1980 and 2000, then the oldest millennials will be 40 years old in 2020, when some of the youngest millennials will be 20. In other words, the youngest of the millennials will still be considered “prime renters” until 2035. Some may think they are entitled, bratty and materialistic — but they will be driving the apartment market for at least the next 20 years.

Consider this: 27% of millennials ages 18-33 have a bachelor’s degree or higher, compared to only 20% of the previous generation, Gen X, according to Pew Research. Only 28% of adult millennials are married, compared to 38% for Generation X when they were 18-33 years old. Perhaps more interesting is how millennials approach the two most expensive assets they will likely ever own: houses and cars.

In 2014, 76.7% of 20-24 year-olds had a driver’s license, compared to 82% of 20-24 year-olds in 2008 and 91.8% in 1983. Over the course of 30 years, the number of young 20-somethings with a driver’s license fell dramatically.  Clearly, the brakes have been put on the car culture that defined Americana in the post-war years. Likewise, only 35% of those 34 and younger own a home, compared to 39% in 2010 and 41% in 2000. In short, Millennials are less interested in driving a car and — at least for now — owning a home.

So what do these trends mean for the apartment market? The homeownership rate is of particular importance because people are classified as either an owner or a renter.

“If the homeownership rate goes down, then the number of renters should go up,” said Jay Denton, Axiometrics Senior Vice President of Analytics. “So, in the end, a declining homeownership rate should benefit the multifamily space, especially given demographics.”

Technology also will be different in the apartment of the future.

Transportation technologies are likely to completely upend the way we think about getting around the city. As driverless cars and Uber-like ride-hailing services become the norm, declining rates of car ownership, more disposable income and the repurposing of America’s 40,000+ parking garages and lots (about 800 millionparking spaces) should follow. This will mean a major change in the physical space that an apartment property occupies, as well as its immediate vicinity. The parking lots could be repurposed into another building or more green space in urban “jungles.”

This, too, ties back into demographic trends: Do millennials want a parking space or do they want adjacent retail shops, movie theaters, restaurants and so on? If it’s the latter, we can safely assume that apartments — particularly those located in urban core areas — will be even more attractive to young renters.

Of course, the economy is a large factor in driving housing decisions. Job growth is the key variable that predicts apartment rent and occupancy growth. When the number of jobs grows in a particular metro, more people come to the metro to take those jobs — and a sizable portion of those job-holders will be renters. In short, when the economy is doing well, so is the apartment market.

So, when we think about the future economy, we need to consider the role of demographics and the business cycle. Starting with demographics, Denton said: “Our country is based on growth, and if you look at millennials, they are waiting longer to have kids, and when they do they are having fewer of them. That means we are not building up our population enough, so we will have to draw on people from other countries.”

In other words, if we are not increasing the population today, then future demand for apartments will suffer as fewer individuals occupy that prime renter age group.

Never far from anyone’s mind is the threat of another recession. As Denton described, “If the economy takes another downturn in the next two or three years, is that another black eye for the single-family home industry? Does the single-family space get hit with a double whammy?”

Another recession in the near future could have two medium- and long-term effects.

  • In the medium-term, it will only further sour younger Americans on homeownership. What is the point in trying to build home equity if there is a deep downturn once a decade?
  • The long-term effects could be similar, but their impact will be protracted: For the youngest millennials alive today, what does it mean to have your formative years colored by deep recessions? Will single-family homes become even less desirable than they might be for the older millennials? Time will tell.

The future is unknowable, and we aren’t presumptuous enough to say that we have some special insight into what the future holds for the apartment industry. We can forecast the key supply and demand variables in the apartment market five years into the future, and we can do so with a considerable degree of accuracy.

But all predictions are necessarily imperfect. What analysts and observers should be doing is asking the sorts of questions raised in this post: questions about the replicability of historical trends, demographic changes, technological disruptions and so on.

All the better to ask these questions now so that the future can be accommodated rather than resisted.

Seven Under-The-Radar Cities For Renters

Written by Landlord Property Management Magazine on . Posted in Blog

By Carl Whitaker | Axiometrics Real Estate Analyst

ForRentSign_1

San Francisco. Los Angeles. New York. These are just a few metros that are constantly brought up in conversations regarding the apartment industry due to their high demand among renters.

But what about other metros not at the forefront of international – or even American – consciousness? “Under the radar” metros, if you will. Some metros such as Chattanooga, Ann Arbor and Reno may not have the same clout as the larger metros mentioned earlier, but would still make wonderful places for many people.

So from an apartment renter’s perspective, what are some of these under the radar metros?

Axiometrics has compiled a list of metros fitting this criteria. Whether it be their affordable rent, strong economy – e.g. strong job growth – or a certain je ne sais quoi,these metros are surely worth an under the radar discussion.

They’re also less expensive for renters than the national average.

Under the Radar

Athens, GA: Those familiar with the college football landscape immediately recognize Athens as the home of the University of Georgia. While it may seem as though this quintessential college town is a one-trick pony whose economic prosperity depends solely upon the university, recent job growth figures suggest the Athens metropolitan area has far more working in its favor.

In fact, Athens has seen some of the strongest job growth in the nation – an estimated 4.0% job growth between June 2015 and June 2016 – which means those looking to rent an apartment in the area probably won’t have much trouble finding a job. Music lovers will find more than their fair share of concerts to attend as well, as the city has a thriving music scene – not an uncommon phenomenon in college towns.

Savannah, GA: Located on the Georgia coast, Savannah is steeped in history and is one of the oldest cities in the southern U.S.

Much like the other Peach State city on this list, the Savannah metro has enjoyed healthy job growth over the past year (approximately 4.1% from June 2015 to June 2016), which of course makes the task of finding a job much easier. Furthermore, the 10% job growth within the Professional and Businesses Services sector suggests jobs coming to the area are higher paying jobs – another indicator of a strong local economy.

Given its antiquity, history buffs looking to rent an apartment might not have to look much farther than Savannah. As an added plus, Savannah’s proximity to the beach means you’re a history buff and a beach-goer, Savannah just might be your perfect city.

Cape Coral, FL: Cape Coral is included in this list because many people may overlook the coastal city in favor of larger Florida cities such as Miami, Orlando, and Tampa.

Make no mistake, though, that the Cape Coral area has plenty to offer those looking to rent an apartment. Job growth figures since 2015 suggest the area’s economy is doing well, and finding a job won’t prove to be too problematic.  Cape Coral’s job growth of 4.2% over the past twelve months – driven primarily by growth in the Leisure and Hospitality sector – places the city among the nation’s fastest job growth markets.

Baseball fans will be especially endeared to the area. With four minor-league baseball stadiums within a two-hour drive and the month-long sanctuary that is spring training, taking in a few dozen baseball games every year is as easy as can be.

Ann Arbor, MI: Ann Arbor is another city often associated with a university (the University of Michigan), but the city’s sheer size and importance for the region this means Ann Arbor is a town bustling with activities for residents. The low unemployment rate (3.2% according to the latest figures) and high job-growth rate (4.4% from June 2015 to June 2016) reinforces Ann Arbor’s importance as a regional employment hub.

Word to the wise – those looking to catch a college football game at Michigan’s stadium, “The Big House” (an appropriate name seeing that it’s the largest stadium in the nation), may want to consider buying tickets well in advance, as the stadium is consistently filled to capacity.

Reno, NV: Reno is yet another city enjoying its fair share of recent economic prosperity. The northwestern Nevada city can boast about its recent job growth, which is among the nation’s best since the beginning of 2015. Multiple employment sectors including Mining, Logging, and Construction, Professional and Business Services, and Trade, Transportation & Utilities have all grown more than 4% since June 2015.

Those looking to rent in Reno will also find plenty to do throughout the year. The city’s close proximity to the Sierra Nevada Mountains means renters can spend their winters skiing and the rest of the year enjoying an array of entertainment options around the city.

Chattanooga, TN: Tucked in between a few of the many ridges created by the Appalachian Mountains, Chattanooga is one of the nation’s most scenic cities. In fact, the official nickname of the city is the “Scenic City”.

Chattanooga, though, has far more to offer than just its natural beauty. Chattanooga was the first city in the nation to implement fiber optic internet service, which means residents have the luxury of incredibly fast internet speeds. This fiber optic network is helping spur the city’s economy forward as well.

Tacoma, WA: Tacoma may get overlooked in favor of nearby Seattle, but Tacoma has plenty to offer potential renters. For one, the rent in Tacoma is much cheaper than Seattle. While the average rent in Seattle will cost you almost $1,700 per month, the average rent in Tacoma is about $500 less.

A drive of 40+ miles may scare off some folks, but other transit options such as SoundTransit are viable options to cut down on the commute hassle. In addition, Tacoma has been adding a healthy amount of jobs – 3.5% job growth from June 2015 to June 2016 – so a commute to Seattle may not be necessary. Nearby Mount Rainier is also a plus for any outdoorsy types.

Axiometrics’ specialty is monitoring the apartment and student housing markets to provide a granular view of volatile market trends through the interactive AXIOPortal.

UPDATE: The Brexit Impact on Apartment Investment: U.S. Sector Could See Gains

Written by Landlord Property Management Magazine on . Posted in Blog

Shared post from Axiometrics | Contributed by KC Sanjay

Brexit

Great Britain voters decided on June 23 to leave the European Union. The somewhat surprising 52%-48% result — the “remain” side had a narrow lead in the final pre-vote polls — was capped by Prime Minister David Cameron’s announcement that he would resign.

Analysts are mixed about the effect the “Brexit” from the EU will have on the British economy, but the decision could make an impact on apartment investment in the United States, Axiometrics economists say.

International investors have been increasing their holdings in the U.S. over the past several years, as they have gained a better understanding of the American apartment market and appreciation of the sector’s profitability. Before recently, the idea of professionally managed properties of 300 units or more just didn’t translate.

But international investors sunk $16.3 billion into U.S. multifamily in 2015, about 11% of the record $150 billion worth of transactions in the sector, according to Real Capital Analytics (RCA). While Canadian investors provided the lion’s share of that international money ($11 billion), those from Great Britain had the second highest concentration at $2 billion.

The Brexit could decrease the value of British real estate, at least in the short term, as the United Kingdom attempts to first negotiate its way out of the EU, then seeks new trade deals on its own. That could send British speculators looking for someplace safe to spend their investment pounds and shillings, and the United States has one of the most attractive apartment markets in the world, according to Axiometrics economists.

Multifamily – comprising apartments, condominiums, student housing, senior housing and other products – is one of the five primary commercial real estate sectors, along with retail, office, industrial and lodging. The sector accounted for 25%-30% exposure of all commercial real estate portfolios in 2015 and the first quarter of 2016 – meaning multifamily is bringing in more than its share of investment compared to other sectors.

Meanwhile, the U.S. government made international investment in America easier by easing the tax burden on many of these deals. For example, a non-U.S. investor can now own up to 10% of a REIT before incurring federal taxes – up from 5%. This December 2015 action also exempts certain foreign pension funds from taxes from their U.S. property holdings.

Not only might British investors seek safety in the United States, but patrons from other nations could look to shift some investing from Britain to the U.S., according to Axiometrics’ economic analysis. London and New York, in that order, are the most popular locations for international investment. A weakened London market could spur more money toward New York, where 32% of 2015 multifamily investment was from outside the U.S., according to RCA.

Investors from the Middle East, who have long favored London, could be ready for a bigger bite of the Big Apple if they see profitability falling in Great Britain.

On the other hand, a post-Brexit British recession – one of the potential scenarios prophesied by economists – could depress U.K. apartment values so much that U.S. investors might see a “buy low” play overseas and spend some investment dollars on London flats.

Cameron bucked many of his Conservative Party patrons by urging his constituents to vote to remain in the EU, a position also held by much of the Labour Party and U.S. President Barack Obama. The rapidly emerging United Kingdom Independence Party (UKIP) is among the most vociferous supporters of the “leave” movement. The political ramifications beyond Cameron’s resignation could be significant.

Had voters followed Cameron’s lead and elected to remain in the EU, international investment in U.S. multifamily would have likely remained on its current trend line: Steadily increasing as market strength and investment conditions improve.

Read more from Axiometrics online

Multifamily Permits Declining from 2015

Written by Landlord Property Management Magazine on . Posted in Blog

Shared post from Axiometrics, IncTotal U.S. housing starts slowed in March after accelerating in February. Privately owned housing starts in March were at a seasonally adjusted annual rate (SAAR) of 1.089 million units, 8.8% below February’s revised estimate of 1.194 million according to the U.S. Census Bureau.

Total residential starts were 14.2% higher than the March 2015 rate of 954,000. The 764,000 single-family (SF) starts reported in March, on an annual basis, were down 9.2% from February, but up 22.6% from March 2015’s annual rate. The 312,000 multifamily starts were down 8.5% from the previous month’s annual rate, but increased just slightly (+0.4%) from March 2015.

Total residential permits from municipal and other authorities reached 1.086 million units in March on a SAAR basis, a 7.7% decrease from February’s annual rate but a 4.6% increase from the March 2015 figure. Annual permits for SF homes slipped 1.2% from February to 727,000, but increased 13.2% from March 2015. The annual rate for SF permits has exceeded 700,000 units for six consecutive months.

The 324,000 multifamily permits issued in the 12 months ending March represented a 12.4% decrease from March 2015’s annual rate of 370,000 units and were 20.6% below February’s annual rate. March’s annual rate was 28% below the 12-month average of 447,000 units (SAAR).

Housing Starts in U.S. Declined by 5.9% Amid February Snow
Mar16Cons_1.jpg
 Other U.S. Census statistics of note:

  • Annual gains in total starts from March 2015-March 2016 were spread across all regions, despite slowing multifamily starts in the Midwest (-40.0%) and South (-10.4%) regions. Multifamily starts significantly increased in the Northeast (+21.4%) and the West (+47.4%).Mar16Cons_2-1.jpg
  • Annual single-family starts were down in all regions from February: -8.6% in the Northeast, -21.2% in the Midwest, -4.9% in the South and -9.1% in the West. But all regions increased from March 2015 rates: 20.5% in the Northeast, 41.4% in the Midwest, 17.5% in the South and 24.3% in the West.
  • Annual total residential permits increased from the March 2015 rates in the Midwest (+24.2%) and South (+11.3%), but the Northeast (- 21.7%) and West (-6.1%) declined because of slowdowns in multifamily permits. Annual single-family permits increased in all regions from March 2015. Compared to February’s SAAR, however, the West (-6.8%) and Midwest (-3.2%) declined, the Northeast saw no gain or loss and the South was up 1.2%.
  • A total of 1.061 million residential units were completed in the 12 months ending March 2016, a 31.6% increase from March 2015 and a 3.5% increase from February. SF completions were up 23.2% to 734,000 units for the year on an annual basis, while multifamily completions increased by 58.8% to 316,000 units from March 2015.

Metro Focus

The top 10 Metropolitan Statistical Areas for multifamily permitting for the trailing 12 months ending March 2016 were:

Mar16Cons_3.jpg

Nine of last month’s top 10 metros for annual multifamily permits returned to the list again in March and in the same order. Nashville jumped from No. 12 in February to No. 8 in March. Denver dropped from No. 8 to No. 11 in March.

Nashville and Dallas were the only top 10 markets with increased annual multifamily permits from the previous month; the remainder of top 10 markets decreased by an average of 650 units. Compared to one year ago, New York’s increase in annual multifamily permits of more than 34,000 units (mostly attributable to tax credit law changes) still leads the rest of the top 10, but Dallas (+8,167), Nashville (+3,285) and Atlanta (+3,291) also had strong increases. Boston increased its annual total from last year by about 1,800 units permitted, while Houston (-6,770) and Seattle (-4,029) slowed their multifamily permitting pace considerably.

The total number of annual multifamily units permitted in the top 10 metros (178,199) was 28.5% higher than the total for the same 10 metros one year ago, but 2.1% less than February’s 12-month total (182,004). This month’s top-10 total is about the same as the total for the next 54 metros (178,595).

Within the current top 10 metros, annual multifamily permitting increased significantly from March 2015 in:

  • New York (+122%).
  • Nashville (+58%).
  • Dallas (+52%).
  • Atlanta (+37%).
  • Boston (+26%).

Annual multifamily permitting increased moderately from March 2015 in:

  • Washington, DC (+3%).

Annual multifamily permitting decreased from March 2015 in:

  • Los Angeles (-1%).
  • Austin (-4%).
  • Seattle (-27%).
  • Houston (-27%).

Access the latest permit trends tables in Excel format here.

Please contact us if you have any questions.

Jay Denton
Senior Vice President
KC Sanjay
Sr. Real Estate Economist
Chuck Ehmann
Real Estate Economist

Large Apartment Markets Drive Moderation Trend: Secondary Markets are the Hottest

Written by Landlord Property Management Magazine on . Posted in Blog

Contributed by Dave Sorter, Axiometrics

The expected moderation that occurred in the national apartment market during the past two quarters was the result of many factors – a wealth of supply entering the market, regional Apartment_Market_Moderation.jpgeconomic conditions and unsustainably high rent growth among them.

When annual effective rent growth and occupancy rates decline, it can be difficult to remember that just a few months earlier, the sector was in the midst of its strongest period since at least the start of the Great Recession.

Just as a presidential election is, with the Electoral College, the aggregation of 51 state/federal-district elections, national apartment performance is a compendium of hundreds of metro markets throughout the country. Obviously, larger cities have more apartments and have greater weight in the national averages.

The recent moderation has been largely the result of sharp decline in many of the largest metros in the nation. Some of them, such as Houston, have suffered from economic woes combined with a glut of new supply. Others, such as San Francisco and Denver, also experienced lower job growth near the end of 2015, but had such high effective rent growth that it had to decrease eventually.

And the largest market, New York, has also sustained significant rent-growth decline in the past half-year. Other very large metros, such as Atlanta, Dallas and Los Angeles, have neither increased nor decreased significantly. In fact, no really primary market is in the fast lane of growth.

As rent growth in these metros declined or maintained, however, the metrics started surging in smaller markets. Sacramento has seen an exceptional increase in annual effective rent growth in the past six months, and Salt Lake City has made its way into the top 10 among metros with the highest rent growth. Long Island and Newark are no longer playing second fiddle to the Big Apple.

A look at year-to-date effective rent growth in some of these markets tells the story of how some larger markets have moderated while some smaller markets have strengthened.

San Francisco, for example, combined with Bay Area neighbors Oakland and San Jose to comprise three of the five highest rent-growth metros for much of the first half of 2015. But the chart below shows that, come September, 2015 YTD rent growth for San Francisco apartments dropped from the second-highest figure since the recession to the lowest. As of March, 2016 YTD rent growth also is at a post-recession low.

San_Francisco_Apartments_YTD.jpg

Denver had a similar end to 2015, finishing with its lowest YTD rent growth of the recovery – though 5.6% was fairly robust. Things were looking the same through the first two months of 2016, with negative YTD rent growth in January, though a strong March rebound moved Denver apartments out of the post-recession basement.

 Denver_Apartments_YTD.jpg

Houston apartments, still sustaining minimum job growth as a result of a weakened oil industry, had negative YTD rent growth in March for the first time since the recession ended. This following a 2015 that beat out only 2010 among the post-downturn years.

Houston_Apartments_YTD.jpg

Sacramento is on the other end of the spectrum. After experiencing some lean years during the early part of this decade, this metro’s 2014 and 2015 were the strongest of this cycle. This year is on the same track, with March’s YTD effective rent growth for Sacramento apartments some 80 bps above the next-highest March, in 2012.

Sacramento_Apartments_YTD.jpg

And while Salt Lake City’s March 2016 YTD rent growth is the third-highest of the post-recession period, it was the highest since 2013 and continued the trend started in the second half of 2015, when the metro avoided the common fourth-quarter dip and climbed to tie for the highest year-end rate of the decade for Salt Lake City apartments.

Salt_Lake_City_Apartments_YTD.jpg

With annual effective rent growth either declining or relatively stable in most major markets over the past half-year, it follows that the national market would mimic that trend. The smaller markets are somewhat offsetting the moderation of their bigger brothers and are on pace to continue to do so, as national rent growth is forecast to average 3.5-4% this year.

Dave Sorter

Dave Sorter is an award-winning journalist who spent 30 years as a newspaper reporter and editor before joining Axiometrics. He oversees all Axio blogs and newsletters and serves as senior editor of all Axio publications.

Prelude to Apartment Market Rent Growth?

Written by Landlord Property Management Magazine on . Posted in Blog

The rent growth of asset classes — especially Class A — could predict movement for an entire apartment market.

Contributed by Dave Sorter, March 21, 2016

Many factors enter into forecasting future performance of apartment markets, but often, the movement of asset classes’ annual effective rent growth is a possible indicator of short-term trends.

The direction in which Class A properties are headed can be especially prescient. If rent growth in the apartment communities in this class, representing the 20% highest rents in a market or submarket, begin trending upward, the metro as a whole will likely see a spike within the next couple of months. Class C represents the 20% lowest rent in a market or submarket, while Class B includes the rest.

Conversely, a couple months of sharp Class A rent-growth decreases could indicate the metric will enter a period of decline.

Class A properties are usually the newest, shiniest projects, as well as the most expensive. So increases in Class A rent growth often are signs of a strong metro economy with good job growth and moderate new supply. Class A rent growth has an inverse relationship with new supply.

Class A rent is driven by high-paying jobs, primarily in technology, education and health. Classes B and C, however, fall into the category of “workforce housing.”

Axiometrics looked at two metros that experienced significant rent-growth strengthening in the second half of 2015 and the first two months of 2016, and three other markets with quicker-than average declines. In most cases, class movement was a portent of the trend to come.

The Austin apartment market was at a low point of this cycle early in 2015. Possible oversupply in the urban-core Central submarket somewhat counteracting excellent job growth to reduce annual effective rent growth to less than 4% for the first time since mid-2013. But looking at class trends, Class A was on the way up starting in January 2015 and climbed steadily through August 2015.

Austin started to re-emerge in April 2015, and rent growth surpassed the national average in July.

Asset_Class_Austin.jpg

Job growth remained strong in Austin, and rents had dropped enough in the urban core by March 2015 that they were now affordable to more people, increasing absorption. In addition, suburban submarkets continued to strengthen. The Central submarket still has almost flat rent growth and construction is continuing there, but landlords there don’t have to lower rents as much as they did, allowing the suburbs to drive robust growth.

Sacramento – another high job-growth metro – climbed within 5 basis points of having the highest annual effective rent growth among Axiometrics’ top 50 apartment markets in February and was one of only two of those 50 metros to surpass 8% rent growth, much less double digits.

Unlike Austin’s steady climb, Sacramento’s rent-growth journey has been volatile, as have the asset classes – though rent growth has been an elite 7.9% or higher since June 2014. Its February rent growth was the highest of this apartment cycle – by just 1 basis point over the previous high in May 2015.

The most recent surge began in December 2015, and February’s rate was 150 basis points above November’s. Yet, Class A rent growth began surging in November, and Class C in October.

Asset_Class_Sacramento.jpg

Houston, Denver and San Francisco have had the most publicized decreases in annual effective rent growth over the past nine months. In San Francisco’s and Denver’s cases, unsustainably high performance combined with decline in job growth caught up with the markets. Job losses caused by the steep decline in oil prices along with undebatable oversupply in the urban-core Montrose/River Oaks submarket can be blamed for Houston’s recent performance.

Houston rent-growth has decreased for 13 of the past 14 months as of February, but the downward trend for Class A (and Class B) began in November 2014 – two months before the metro decline began. Both of the two higher asset classes have been constantly sliding since then, with Class C a little more volatile.

Asset_Class_Houston.jpg

San Francisco was among the top 5 for annual effective rent growth for most of 2014 and 2015, with rates above 11% as recently as September 2015. But the decline from such heights came swiftly, though at 4.7% in February, rent growth is still strong.

Class A started its downward pattern in August 2015, even as the metro rate was continuing to increase. Though Class A rent growth rebounded in September, the other two primary asset classes were starting a descent. Class A’s September strength was a last gasp for the year, as that rate decreased precipitously along with the metro’s through December.

But, as the chart below shows, Class A rent growth has increased slightly during the first two months of 2016. Is that a sign that San Francisco may have hit its valley and rent growth will begin climbing again? Tune in next month.

Asset_Class_San_Francisco.jpg

Denver was another top 5 rent-growth markets during parts of 2015, but declining job-growth rates overall and in most sectors – even though only Information actually lost jobs last year – and affordability issues resulted in a decline to the extent that Denver underperformed the nation in February. That hadn’t happened since December 2009, when the apartment market was in its recessionary tailspin.

The metro’s rent growth began declining in July 2015, but Class A foreshadowed the trend by starting its moderation in May 2015. Classes B and C soon followed.

Asset_Class_Denver.jpg

Though certainly not the only indicator, asset class trends often can predict what will happen in an apartment market in the short term, with a month or two lag. That’s one reason that monthly market intelligence is so important when analyzing individual metros and properties.

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