Inflation remained unchanged in September with prices rising 3.7% compared to the year before. Annual price increases were flat after increasing in both June and July, according to the Consumer Price Index. On a short-term basis, prices increased 0.4% from the prior month.
While most of the nation has seen a decline in rents and a contraction in occupancy leading to negative revenue per available unit (RevPAU), a few markets and submarkets have risen above the rest. Tucson and Chicago are among the best performing markets in the nation, so it is no surprise to see them well represented at the submarket level in terms of top performance.
The economy and interest rate market are working in opposite directions at this point in the cycle. 336,000 new jobs were added in September, nearly doubling analyst expectations. While this is good news for the overall economy, it raises additional questions about the Fed’s course of action with monetary policy going forward.
We are excited to announce some new changes to the Rent and Operating Trends Report beginning this week. Revenue per Available Unit (RevPAU) is a comprehensive apartment performance metric that combines net effective rent with occupancy to identify the total potential revenue given the number of operational units in a property, submarket or MSA.
While declines in net effective rent and occupancy have garnered most headlines in multifamily, demand is quietly holding its own at the national level. Year-to-date, traffic nationwide is up roughly 19%. Some markets have seen even stronger growth thus far in 2023.
Atlanta’s apartment market is struggling as new supply weighs heavily on performance from the property level all the way to the market level. The local economy continues to flourish as job growth and population growth remain among the best in the country, however the onslaught of new apartment construction has outpaced demand.
An inverted yield curve, where long term interest rates are higher than short term interest rates, is often a leading indicator for a recession. In late 2022, during the Fed’s aggressive monetary tightening, the yield curve inverted and remains inverted nearly a year later.