As new construction in the apartment sector takes form, occupancy remains high but rent growth is beginning to slow, according to the latest research from Carrolton, Texas-based RealPage, a software provider for apartment communities. However, RealPage does not see new construction as a threat to the strong rental market nationwide.
Apartment occupancy currently stands at 94.8 percent in the core 100 metro areas measured by RealPage MPF, while rent growth slowed from 4.8 percent at the end of 2011 to 2.6 percent at the start of this year, according to RealPage.
Rent growth peaked just a little more than a year ago, according to RealPage.
""The completions on the way over the next few months appear likely to perform very well without damaging the occupancy
performances of the already-existing stock,"" said Greg Willett, VP of research at RealPage MPF.
In part, Willett sees job creation as a source of momentum for the apartment market as it prompts ""some new household formation among those who have been living at home with mom and dad.""
However, price decisions in the immediate future will likely heed to the new construction as ""[m]any owners and operators at the best properties want to be sure that their apartments are completely full when deliveries of new units ramp up during coming months,"" Willett said.
RealPage predicts rent growth will climb slightly to about 3 percent this year and then drop to about 2.5 percent in 2014.
California markets topped the list of markets with the highest annual rent growth for the first quarter of this year, according to RealPage.
San Francisco and Oakland, California, tied in the No. 1 spot with annual rent growth rates of 6.3 percent. San Jose, California, followed with 5.6 percent growth.
Denver-Boulder, Colorado, and Austin, Texas, filled out the top five with 5.4 percent and 4.9 percent annual growth, respectively.
A couple large apartment markets posted price declines in the first quarter of the year. Notable, Las Vegas prices declined 1 percent, and Virginia Beach-Norfolk, Virginia, prices declined 0.6 percent.