Rent Growth Across the United States
By Christopher Levarek
"There will always be a frontier where there is an open mind and a willing hand."
- Charles Kettering
Yardi Matrix recently released their August 2019 report, “Yardi Matrix National Multifamily Report” detailing rent growth across the United States. This report highlights specific cities when compared to the overall current national average of 3.3%. Rent growth is typically a good sign for a landlord or rental property investor as this means higher demand and lower occupancy rates with increased cash flow opportunities.
In the below graph, we can see that Year of Year rent growth so far for the 2019 year is strongest in Las Vegas, Phoenix, Boston, Sacramento, Austin, Charlotte and Raleigh.
Source: Yardi Matrix
As this is comparing all Asset Classes, it can be beneficial to look at specific asset classes such as the “Renter-by-Necessity”, if the target properties align with such a renter. This would be renters typically around the Class B or C properties or those whose for multiple reasons need to rent due to local economic criteria, lower incomes, large affordability gap (see our article on key market indicators), etc.
When we look at Year-over-Year rent growth for “Renter-By-Necessity” we see a slightly different picture as now Phoenix, Las Vegas and Charlotte are showing the highest YoY rent growth in this asset class on the right side of the picture below:
Source: Yardi Matrix
Finally, looking at YoY rental growth and the occupancy rate gives insight into how these two numbers correlate and allows for forecasting continued trends. This can be helpful when deciding on getting into ascending markets versus stagnant or declining markets.
Below the Current Rent Growth YoY statistics are compared to the “light blue” National average and placed alongside occupancy rates both current and forecasted:
Source: Yardi Matrix
In Final
Rent growth and occupancy indicators are good to track for investors in general and especially help know when to enter/exit a market. If one can find markets with increasing rent growth and low occupancy rates, the chance of a real estate investment being successful in such an area are greatly magnified. Invest Smart!