Market Trends - 05/10/2018 (Plain Text Version)
Apartment Market Posts Solid Quarter
The U.S. Census Bureau’s apartment vacancy rate for all rental apartments (in buildings with 5 or more units) fell 10 basis points (bps) in the first quarter of 2018—but rose 40 bps from the first quarter of 2017—to 8.2 percent.
RealPage’s national vacancy rate for investment-grade apartments rose 10 bps to 5.0 percent in the first quarter, remaining unchanged from the previous year’s 1Q figure. This slight uptick in vacancy rates spanned all regions but was most pronounced in the Northeast, where rates increased 30 bps to 4.3 percent. The Midwest followed with a 20 bps rise in vacancy rates to 5.1 percent, while rates in the South and West climbed 10 bps each to 5.7 and 4.4 percent, respectively.
Multifamily Permits, Starts and Completions Rose
Multifamily permits (5+ units in structure) rose 9.1 percent from last quarter to a seasonally adjusted annual rate (SAAR) of 441,700 in the first quarter, up 10.2 percent from 1Q 2017. On a not seasonally adjusted basis, however, permit levels (2+ units in structure) fell in all regions but the South, which saw 1.7 percent permit growth from 4Q 2017.
Multifamily Absorptions Remain Just Below Record Highs
Net absorptions of investment-grade, market-rate apartments tracked by RealPage ticked up to 47,458 in the first quarter—up from the seasonally weak 31,952 units absorbed in 4Q 2017. This was not enough to keep the trailing four-quarter sum from sliding 2.5 percent from 4Q 2017 to 295,650 units, though still marking a 21.6 percent increase from a year earlier. This marks the sixteenth consecutive quarter in which the trailing four-quarter sum was over 200,000.
Rent Growth Picks Up During the Quarter
Same-store apartment rents for professionally managed apartments tracked by RealPage rose 2.6 percent in 1Q 2018, 10 basis points higher than the previous quarter and 20 bps lower than a year earlier.
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Transaction Volumes Retreat from Fourth Quarter Highs
In the apartment transaction market tracked by Real Capital Analytics, sales volume decreased 25.6 percent from the previous quarter to $34.8 billion, up 25.1 percent from 1Q 2017.
GSEs Top Record Year in Multifamily Mortgage Credit
Net multifamily mortgage credit extended reached an all-time high of $43.7 billion in 4Q 2017, contributing to a record $115.2 billion for the year. This was the third consecutive new record and 29.2 percent higher than the previous high from 2007.
Technical Note. Historical statistics from RealPage, Inc., reflect consolidation of records from the firm’s MPF Research and Axiometrics data sets into a single information source. While individual performance metrics such as monthly rent and net absorption shift to some degree, trends follow patterns reported previously. [return to top]