Why Apartment Rent Growth Is Still Heading Up

Apartment rents are continue to rise across the country, but particularly on the West Coast. According to a new report from Rent Café, apartment rents are up 3.1% nationally, but growing West Coast cities are exceeding the national growth. San Diego apartment rents are up 5% and rents in Phoenix have increased 6.8%. Las Vegas is also seeing substantial rent growth, up 6.2%, according to the report. These three cities are on the list of the top five markets for apartment rent growth.

“Strong economic metrics and healthy demand for rentals from both older renters who are postponing homeownership due to rising home prices and from the increasing number of young renters entering the market continue to drive apartment rates up,” Nadia Balint, the author of the report, tells GlobeSt.com.

While the rent growth is significant, it is not the dramatic rent growth of years past. However, Balint says not to take that as a sign that the market is decelerating. “Although these are not the booming growth rates we were seeing about two years ago, the market is by no means decelerating,” she explains. “Occupancy rates are increasing and the demand holds. Rents have been rising steadily since bottoming out last fall, when the year-over-year growth rate was 2.2%, posting a 3.1% increase on a year-over-year basis in August this year, the highest rate we’ve seen in 18 months. This is certainly affected by the high demand typical during the peak rental season, but it is also the product of a broader issue. Apartment deliveries are seeing some delays, with new apartment completions falling below the initial estimates for 2018, which puts pressure on prices.