Demand for apartments has officially hit unprecedented levels, according to new data from RealPage, with Dallas-Fort Worth leading the way among individual cities
The number of occupied apartments in the 150 biggest US metros increased by 219,909 units in the second quarter, the largest quarterly increase since RealPage began monitoring that figure in the early 1990s. In contrast, demand for apartments in the first quarter of 2020 was a mere 33,000 units.
Apartment demand has been bolstered by rising employment growth, which has spurred household formation, according to RealPage. The most recent numbers from the Bureau of Labor Statistics showed that the economy added 850,000 jobs in June, and employment counts in higher-paying sectors are nearing or exceeding pre-COVID levels. Young adults are also moving out of their parents’ homes and forming their own households again.
“In turn, strong apartment demand registers among the most-affluent renters who can afford the new luxury properties that are coming on stream,” RealPage experts noted in an analysis of the data.
The Sun Belt led growth in the second quarter, with DFW showing demand for 15,400 apartments, followed by Houston (11,400 units) and South Florida (9,700 units). Gateway metros like Los Angeles, Chicago, Washington D.C., San Francisco, and New York also showed signs of a “huge comeback” post-COVID.
The uptick in demand is also driving up rents. Monthly apartment rents increased 5.5% year-over-year to an average of $1,527 in May, according to the latest Realtor.com Monthly Rental Report.
“Led by emerging tech markets and secondary cities, US median rent prices reached the highest level seen in more than two years in May, surpassing pre-COVID levels,” Realtor.com chief economist Danielle Hale said in prepared remarks.
And as housing affordability dwindles, putting homeownership out of reach for many Americans, builders and investors are doubling down on single-family rentals. SFR construction is up a record 66% during the pandemic, with a steady pipeline of construction in the works, particularly in Sun Belt markets.