Industry Analysis - 5% growth

2 Replies

When reports state something like "The national apartment market’s annual effective rent growth rate of 5.1% in June 2015 represented a 47-month high, and continued a streak of 5.0%-plus rent growth..." the growth rate would include new rentals as well as rental increase correct?  I suppose I'm asking if this is a 5% growth increase of all rental income.

It is such a tracked metric I want to make sure I'm looking at it correctly.

This is the increase in the average for a given sized apartment.   So the new average would include any new product coming on line.  Still - that's just a starting point, because there are a number of other parameters since all the units aren't equal.  Maybe the new A class stuff got good rent increases, but older buildings with similar sized units don't.  Also - maybe new units are bigger in sq ft vs smaller older units - so you also want to check that out.

Still, the rent increase is a decent overall barometer, but you need to make sure to dive down to the next level when you start actually looking at a purchase in a specific sub-market.

Originally posted by @Mark Mosch :

This is the increase in the average for a given sized apartment.   So the new average would include any new product coming on line.  Still - that's just a starting point, because there are a number of other parameters since all the units aren't equal.  Maybe the new A class stuff got good rent increases, but older buildings with similar sized units don't.  Also - maybe new units are bigger in sq ft vs smaller older units - so you also want to check that out.

Still, the rent increase is a decent overall barometer, but you need to make sure to dive down to the next level when you start actually looking at a purchase in a specific sub-market.

 Thank you for the feedback Mark.