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Rent And Operating Trends – Week Of January 14th 2024

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Rent And Operating Trends – Week Of January 14th 2024

Chris Nebenzahl

Chris Nebenzahl

The U.S. economy was thrown a slight curveball last week when the December Consumer Price Index came in higher than expected. Inflation increased at an annualized rate of 3.4% marking a modest uptick from previous months. Driving the growth was a 0.4% increase in the shelter index, which relates directly to the cost of housing. However, there is a significant lag in the shelter data for the CPI, and as we’ve reported, housing costs both for rent and for sale homes continue to decline. The energy index also contributed to a large portion of the monthly increase; however, oil prices have been coming down steadily and are near a six-month low. I do not see any significant inflation concerns over the long term, however if inflation remains at its current level, it will likely delay any interest rate cuts from the Fed.

Multifamily fundamentals had another flat week last week, which is a positive sign as we begin the year. Traffic registered a slight increase as apartment renters begin the search for their next home. With a healthy economy and a strong labor market, we are beginning to see housing demand return. Multifamily demand has grown, as persistently high mortgage rates have kept some would-be home buyers in the rental market.

Key Takeaways – Data as of 1/14/2024

Traffic and Leases:

  • Traffic increased modestly last week, and the average property nationwide received 6.3 tours. New leases signed remained unchanged last week and the national closing ratio is 33%.
  • The Southeast and Southwest led the nation in traffic as Tampa, Jacksonville and Charleston all posted strong weekly gains. Albuquerque, Colorado Springs and Salt Lake City also saw improvements in weekly traffic. Except for Colorado Springs, all the top markets for weekly growth maintain absolute traffic levels above the national average.
  • The Southwest also dominated the leasing growth rankings last week, however different markets emerged as the leaders. Phoenix, Los Angeles, and Las Vegas were the top three metros for growth in new leases signed. Phoenix’s strong increase has pushed its weekly leasing and conversion ratio above the national average.

Occupancy and ATR:

  • Occupancy grew modestly last week, picking up one basis point for the second week in a row. The annual occupancy loss nationwide is 66 basis points.
  • 23 markets registered weekly gains last week, topped by Baltimore, whose occupancy increased 27 basis points. Riverside, Albuquerque and Charlotte also had a good week, with occupancy rising by at least 10 basis points.
  • Seattle remains the only market with higher occupancy than a year ago, however many markets are seeing occupancy declines soften. Occupancy has fallen by 50 basis points or less in 14 markets across the country.
  • The average number of units available to rent nationwide remained at 15 last week.


Net Effective Rent:

  • Net effective rents dipped 4 basis points last week and remain 1.5% below their level from this time last year.
  • San Jose led all markets as rents increased 60 basis points. The growth also propelled the Bay Area metro back into positive territory on an annual basis.
  • Chicago posted the weakest performance on a weekly basis, as rents fell 80 basis points. Despite the dip, Chicago rents are still up 3.1% annually, making it one of the best performing markets in the country.

Revenue Per Available Unit:

  • Revenue per available unit fell 3 basis points last week and the national average RevPAU is $1,703.
  • While RevPAU has been falling steadily amid the decline in both rent and occupancy, the national average remains $304 or 21% above its level from January 2021. The past year has been tough for multifamily revenue metrics, and we will likely see continued challenges in the months ahead. However, when considering the long-term growth in our industry, property performance remains well ahead of the historical average on a trailing three-year basis.

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