VeryApt National Rent Report
The VeryApt Downtown Rental Index is up 1% month-over-month. Rent price increases have accelerated m/m as seasonality from the summer kicks in. That said, markets with lots of new construction have been less able to raise rents.
• It’s the start of housing season. Price increases were much steeper than price decreases. To break into the top quartile of price increases this month, a property would have to raise the price of a unit by 4.5% m/m. By contrast, a top quartile decliner only had to drop prices by about 3.0% m/m. As a frame of reference, this threshold is around 4.5% in both directions other times of the year.
• If you want to spend twice as much on rent as you would in Chicago or Philadelphia, the Bay Area has some great options. After some moderation earlier in 2018, Bay Area rental prices are on a tear. Median rents for luxury 1BRs are close to $3,600/month. Chicago and Philadelphia are softer - you can get a luxury 1BR in both of those markets for half the price!
VeryApt Downtown Rental Index
Ultra-High Rent Markets: Median Rent Above $2.6K
Rent prices in Group 1 increased 1.0% m/m, driven largely by strength in Boston and the Bay Area. This is the third consecutive month of increases in ultra-high-rent markets. However, rent prices in Manhattan are flat m/m, as new construction helps moderate prices.
High Rent Markets: $1.8-2.6K Median Rents
Group 2 market rents increased 0.8% m/m but are still weaker than any other segment this year-to-date. New construction across every city in this group is weighing down prices. This is especially true at entry-level price points.
Medium-High Rent Markets: $1.6-2K Median Rents
Rents in Group 3 markets were up 0.6% m/m. Portland continues to drive the increases in this category. Other cities posted modest increases from seasonality. However,, San Diego remains a clear underperformer, with rents falling another 0.6% m/m.
Medium Rent Markets: $1.1-1.6K Median Rents
Medium-rent market prices were up 1.7% m/m, a continued recovery from the start of the year. With the exception of Houston, cities in this segment posted 1.3% and greater m/m increases. This trend was generally consistent across all price segments. Units seem to be renting well at current prices.
Manhattan rents are soft. After strong March numbers, Manhattan rent prices are once again worse than expected and flat m/m. Concessions remain at new properties and lst price increases have been hard to push through after last month. Hudson Yards prices, which have been competitive, have remained firm. Price decreases have shifted to the west side where properties are hurting.
The Bay Area continues to get more expensive. Units are moving at high prices and property managers know it. San Francisco and Oakland rents continue to increase on a m/m basis. Newer units with discounts earlier in the year have been absorbed. Renters have once again lost pricing power, and properties are confident raising prices.
DC rents are increasing but remain lower than expected. DC rents have improved m/m, but prices year-to-date are still quite low. Options that would rent for closer to $2,100/month a few years ago are now on the market for $1,900. New construction has been the driver of this dynamic. Renters are more willing to move to neighborhoods with new construction deals. Adams Morgan apartments and condos are responding to this trend by offering lower prices.
Chicago remains softer than expected. Aggressive concessions continues to exert downward pressure on rent prices. We’re seeing more condos offering competitive list prices in popular neighborhoods.
Philadelphia rent prices are increasing, but prices are all over the place. Philadelphia is a polarized market, which has seen aggressive discounting by some properties and sharp increases by others. Properties want to sprint to a good inventory position, hoping later renters will pay a premium. Traditionally expensive condos are renting for less than they did a few years ago. This is likely due to condo owners being worried that they’ll get burned again by aggressive new construction concessions.