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Rent And Operating Trends – Week Of February 4th 2024

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Rent And Operating Trends – Week Of February 4th 2024

Picture of Chris Nebenzahl

Chris Nebenzahl

In a rare interview on Sunday evening, Fed Chair Jerome Powell explained on 60 Minutes that the Fed is now planning its first interest rate cut since 2020. Most economists expected rate cuts in 2024, however it is abnormal for the Fed Chair to speak publicly on the matter, especially outside of a policy meeting press conference.

While Powell stopped short of estimating when the first cut would come, he inferred that inflation is now under control and he expects annual inflation figures to continue declining, as lagging components, such as housing costs, begin to hit the inflation data. I believe we will see the first rate cut in late Q2 followed by two additional cuts in the second half of the year, but those decisions will be data dependent as we progress through the year. However, it is now clear that the Fed will be cutting rates and Powell took a demonstrative step toward transparency, as he shared his views with the public.

Multifamily performance had another strong week last week with all key metrics increasing from the week prior. Occupancy and traffic led the way once again, and average traffic nationwide is above 7 tours per property, while occupancy climbed above 93.7%. Rent, RevPAU and leases signed all increased modestly as well. Demand appears strong as we move into February, and another steady month should set up nicely for the 2024 leasing season.

Key Takeaways – Data as of 2/04/2024

Traffic and Leases:

  • Traffic increased by nearly a half tour per property nationwide, as apartment hunters continue to look for new homes. Perhaps more impressive than the nationwide gain is the fact that only one market tracked by Radix Research saw traffic fall last week.
  • Arizona markets led the nation as Tucson picked up a full tour per property, while Phoenix traffic increased by 0.8 tours per property last week. Other southwest markets including Salt Lake City, Albuquerque, and Denver, were all in the top 10 for traffic increases.
  • Leasing increased as well, but not as sharply as traffic. Nationwide, properties are averaging nearly 2.5 new leases signed per week.
  • Chattanooga led all markets, picking up a half lease signed per property last week. Its Tennessee neighbor Memphis however, trailed the rankings, as leasing activity dropped by 0.4 leases per property last week.

Occupancy and ATR:

  • Occupancy picked up by 2 basis points nationwide last week. The national occupancy rate has increased each week thus far in 2024 and is down only 61 basis points from this time last year.
  • Salt Lake City picked up 19 basis points of occupancy last week, bringing its market occupancy rate to 93.83%. Las Vegas was second in the nation with a 16-basis point occupancy increase. Both southwestern markets are good examples of demand enduring beyond supply waves. These two metros have experienced significant new supply in recent years, but the pace of new construction is beginning to slow. Strong demand has continued and as such, operating fundamentals are improving. Las Vegas occupancy is down only 13 basis points from a year ago. By comparison, occupancy had fallen 230 basis points over the previous 12 months.


Net Effective Rent:

  • Net effective rent increased 10 basis points last week, bringing the national average to $1,817. On an annual basis, rents are down 1.6% nationwide.
  • Virginia Beach led all markets, as rents grew 80 basis points last week. The Mid-Atlantic metro maintains strong fundamentals across the board, with occupancy above 95% and rent growth up 1.3% year-over-year.
  • Boston was the weakest performing market last week, with NER dropping 50 basis points. The metro remains one of the stronger performing markets on an annual basis, but rent has fallen below $3,000 in recent weeks.

Revenue Per Available Unit:

  • RevPAU increased 10 basis points last week as both rents and occupancy increased.
  • Small markets continue to dominate the annual RevPAU growth rankings with Midland, TX, Tucson, AZ and Columbia, SC taking the top three spots, with RevPAU growth of more than 3.5%.
  • Southeastern markets were the top performers last week with Virginia Beach, Greenville, SC, Miami, and Memphis topping the weekly growth rankings.

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Picture of Chris Nebenzahl
Chris Nebenzahl
Chris Nebenzahl is the Director of Economic Research at Radix, where he oversees all macroeconomic and multifamily market analysis. Chris has 15 years of multifamily experience in data analytics, research, asset management and acquisitions. Prior to his time in the multifamily industry Chris was a portfolio manager at Bank of New York, focusing in the government and commercial fixed income sectors.
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