The nation’s 150 major apartment markets have seen approximately 2 million new apartments built since 2010, but there’s a problem. The number of renters in those cities have increased by about 2.5 million in that same time period. And with renting an apartment becoming more popular than it has in 20 years, that leads to many markets were demand exceeds supply.
In fact, according to a new study from RealPage, there are only three markets among those 150 where supply has outpaced demand: Washington, DC, Miami, and Austin, Texas.
Overall, apartment occupancy was the highest in August that it has been at any point since the tech boom in 2000, RealPage said earlier this month. August also marked the seventh consecutive month that apartment occupancy has risen, and the 12th consecutive month of rent growth at or above 3%.
Of the nation’s 150 major markets, 91 of them met or exceeded the national norm for occupancy and hit the effectively full mark of 95% in August.
As for the nation’s capital, it’s one of the select few markets where too many apartments were built.
“Demand drivers are strong in Washington, DC, but supply proved to be stronger in the current cycle,” RealPage said in its report. “This was one of the country’s new apartment supply hotspots during the cycle, with over 109,000 units delivered. Higher completion volumes were achieved in only two other markets: Dallas (124,700 units) and Houston (110,000 units). Deliveries in the nation’s capital expanded the existing base by 18.4% since early 2010, well ahead of the national average of 12.7%.”
And while demand was high, third highest in the nation, in fact, it still trailed supply creation.
Occupancy in the district has remained at 95% to 96%, as rent has risen 2% throughout the cycle and occupancy has risen just 2.9% year over year in the second quarter of 2019.
Miami has gained 30,900 units this cycle, causing the base to grow 9.9%. In 2015, Miami’s annual supply reached its highest of 4,000. In Q2 2018, it reached 6,000. In this cycle, Miami has absorbed 29,000 apartments, about 1,800 units less than total supply. Occupancy rates have been around 95% to 97%.
Austin, Texas was ranked No. 7 for apartment supply in this cycle, and No. 10 nationwide for supply volume. Although rent growth in Austin was 41.3%, well ahead of the U.S. norm of 34.6%, rent change has averaged 3.9% and rent growth has been around 94% to 96%.
Over 64,000 units have been delivered in Austin during this cycle.