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@ApartmentWire#NMHCresearch
2019 NMHC Research ForumApril 2-3, 2019
@ApartmentWire#NMHCresearch
Apartment Markets
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APARTMENT MARKETS
Jeanette Rice,CBRE(Moderator)
Ryan Davis,Witten Advisors LLC
Carl Whitaker,RealPage, Inc
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MARKET SAYS THE FED IS NOW MORE LIKELY TO CUT RATES THAN RAISE THEM
Source: CME Group
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Jan'19 Feb'19 Mar'19
Market-Based Probabilities of Fed Rate Actions (Cut, Raise, or Hold Steady) in 2019
CutHold
Steady
Raise
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RENT GROWTH LEADERS AS OF 1Q19 (PRELIMINARY)
Source: RealPage
Market Annual Rent Growth (1Q19)
Phoenix 8.0%Las Vegas 7.9%
Atlanta 5.3%Greensboro 5.2%
Memphis 5.1%Sacramento 5.0%
Riverside 4.8%Austin 4.7%
Jacksonville 4.2%Tampa 4.2%
U.S. 3.2%
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MANY OF THE LEADING RENT GROWTH MARKETS ARE LATE RECOVERY
Source: RealPage. “Recovery” defined as the year in which the market’s total employment base reached pre-recession (2Q08) levels.
Market Annual Rent Growth (1Q19)
Time ofRecovery
Phoenix 8.0% 4Q14Las Vegas 7.9% 4Q15
Atlanta 5.3% 4Q13Greensboro 5.2% 4Q16
Memphis 5.1% 4Q15Sacramento 5.0% 2Q15
Riverside 4.8% 4Q13Austin 4.7% 4Q10
Jacksonville 4.2% 4Q14Tampa 4.2% 2Q14
U.S. 3.2% 4Q13
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Monthly Total 5+ Starts Annualized, SA
12-Month Total 5+ Starts
389.2
348.7
0
100
200
300
400
500
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Mul
tifam
ily S
tart
s (00
0)
TOTAL 5+ STARTS OFF PEAK LEVELS, BUT ROSE 5% IN 2018; EBBED IN EARLY 2019
Source: U.S. Department of Commerce
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2018 STARTS DOWN IN MOST MAJOR MARKETS, BUT SURGING IN SOME
0%
1%
2%
3%
4%
5%
6%
7%
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December 2017 December 2018
Source: Witten Advisors
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IN 2018, CLASS A GROWTH TOPPED CLASS C FOR THE FIRST TIME IN THREE YEARS
Source: RealPage
0%
1%
2%
3%
4%
5%
6%
7%
4Q10
2Q11
4Q11
2Q12
4Q12
2Q13
4Q13
2Q14
4Q14
2Q15
4Q15
2Q16
4Q16
2Q17
4Q17
2Q18
4Q18
Annual Rent Growth by Asset Class
92%
93%
94%
95%
96%
97%
4Q10
2Q11
4Q11
2Q12
4Q12
2Q13
4Q13
2Q14
4Q14
2Q15
4Q15
2Q16
4Q16
2Q17
4Q17
2Q18
4Q18
Occupancy Rate by Asset ClassA: 3.2% B: 3.5% C: 2.9% A: 94.9% B: 95.4% C: 95.9%
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THE SPREAD BETWEEN A & B RENTS IS GROWING
Source: RealPage
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
4Q99
4Q00
4Q01
4Q02
4Q03
4Q04
4Q05
4Q06
4Q07
4Q08
4Q09
4Q10
4Q11
4Q12
4Q13
4Q14
4Q15
4Q16
4Q17
4Q18
Average Monthly Rent By Class
Spread from Class A to Class B Rental Rate
2000 25% + $200
2008 32% + $310
2013 40% + $415
2018 38% + $490