RealPage's Greg Willett

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RICHARDSON, TX—Although lower in velocity than the apartmentsector saw a few years ago, rent growth is continuing across theboard, RealPage Inc. said Wednesday. However, occupancy has slippedfractionally and the balance of 2017 poses a question mark aroundthis metric.

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Effective rents for new leases climbed 0.9% in the third quarterand 2.6% year over year, according to data from RealPage andAxiometrics. Annual rent growth has maintained a rate between 2.5%and 3% thus far this year, slowed considerably by an influx of newproduct. In contrast, annual growth of 5% or better was notuncommon in 2015.

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The comparatively moderate pace of rent growth at present is“roughly in line with the long-term norm,” says Greg Willett, chiefeconomist with Richardson, TX-based RealPage. “Consumers shouldfeel more comfortable with rental housing price jumps similar totypical wage growth, after several years when rents rose fasterthan incomes.”

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In keeping with the slower pace, just two metro areas postedY-O-Y rent gains exceeding 5% in Q3: Sacramento, with 6.8% growth,and Las Vegas, with 5.8%. Atlanta, Dallas and Charlotte, all ofwhich had been in the top 10 in recent quarters, are nowexperiencing milder growth, with Y-O-Y increases of 3.5%, 2.8% and2.5%, For all three metros, an ample supply of new urban coreproduct moving through the lease-up is behind the slowdown.

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If it hasn't already, new product could affect occupancy ratesin the coming months. ““Occupancy normally peaks in the thirdquarter and then falls off a bit due to seasonally slow leasing atthe end of the year,” says Jay Denton, VP of RealPage's Axiometricsgroup. “We have some concern about how much occupancy coulddeteriorate during the next few months, given big blocks of newsupply are set for delivery during the seasonal leasing lull.”

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As it stands, occupancy slipped by 20 basis points from theprevious quarter to 95.5%, still within the typical range of atight market. It's down 50 bps from the year-ago period, althoughMinneapolis, Providence, Detroit, Boston, the New York Citytri-state region and most of the major West Coast markets all haveoccupancies of 96.5% or better.

|

RealPage's Greg Willett

|

RICHARDSON, TX—Although lower in velocity than the apartmentsector saw a few years ago, rent growth is continuing across theboard, RealPage Inc. said Wednesday. However, occupancy has slippedfractionally and the balance of 2017 poses a question mark aroundthis metric.

|

Effective rents for new leases climbed 0.9% in the third quarterand 2.6% year over year, according to data from RealPage andAxiometrics. Annual rent growth has maintained a rate between 2.5%and 3% thus far this year, slowed considerably by an influx of newproduct. In contrast, annual growth of 5% or better was notuncommon in 2015.

|

The comparatively moderate pace of rent growth at present is“roughly in line with the long-term norm,” says Greg Willett, chiefeconomist with Richardson, TX-based RealPage. “Consumers shouldfeel more comfortable with rental housing price jumps similar totypical wage growth, after several years when rents rose fasterthan incomes.”

|

In keeping with the slower pace, just two metro areas postedY-O-Y rent gains exceeding 5% in Q3: Sacramento, with 6.8% growth,and Las Vegas, with 5.8%. Atlanta, Dallas and Charlotte, all ofwhich had been in the top 10 in recent quarters, are nowexperiencing milder growth, with Y-O-Y increases of 3.5%, 2.8% and2.5%, For all three metros, an ample supply of new urban coreproduct moving through the lease-up is behind the slowdown.

|

If it hasn't already, new product could affect occupancy ratesin the coming months. ““Occupancy normally peaks in the thirdquarter and then falls off a bit due to seasonally slow leasing atthe end of the year,” says Jay Denton, VP of RealPage's Axiometricsgroup. “We have some concern about how much occupancy coulddeteriorate during the next few months, given big blocks of newsupply are set for delivery during the seasonal leasing lull.”

|

As it stands, occupancy slipped by 20 basis points from theprevious quarter to 95.5%, still within the typical range of atight market. It's down 50 bps from the year-ago period, althoughMinneapolis, Providence, Detroit, Boston, the New York Citytri-state region and most of the major West Coast markets all haveoccupancies of 96.5% or better.

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.

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