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Average Apartment Rent Goes Above $1,500 for the First Time Ever

Erlin Taylor - Tuesday, August 24, 2021
Average Apartment Rent Goes Above $1,500 for the First Time Ever

All across the country, apartment rents, occupancy, and demand are at all-time highs. The effects of the pandemic on rental rates seem to be over for most of the U.S. For property managers, this is worth taking note of. The National Apartment Association reports that the average monthly rate in June 2021 reached $1,513, passing the $1,500 mark for the first time in history. This is a clear indication that rental rates bouncing back. 

In a survey of properties in the largest 150 metro areas, the asking price for apartment rents increased by 2% in June and is at 6.3% year over year. This is the biggest 12-month increase since 2001, while occupancy is at 96.5%, the highest since 2000. The demand during the second quarter also increased from the same time last year, with the biggest quarterly jump since the early 1990’s. This is quite significant and demonstrates that the country is finally working its way out from a volatile 2021. 

Metro areas with 100,000 or more apartment homes, including Phoenix, Atlanta, and Las Vegas, saw double-digit annual rent growth. Boise, Idaho continued to lead the increase in rent leading all metros surveyed with a 21.2% yearly increase. Most rents everywhere in the country continue to increase, but some areas that were more affected by the COVID-19 pandemic compared to other metro areas are still reporting annual rent declines. These areas include San Francisco and New York. Many people left these areas at the height of the pandemic due to the high cost of living in these cities. 

Smaller metros areas reported the highest occupancy rates in June 2021. At the top of the list were Salisbury, Maryland; Bakersfield, California; and Allentown, Pennsylvania, with at least a 99% occupancy rate. Riverside or San Bernardino in California reported 98.5% occupancy rate making it the only larger market to have an occupancy rate similar to the smaller areas. 

In the second quarter of the year, occupied apartments in the areas surveyed increased by almost 220,000, surpassing last year’s second quarter of approximately 33,000 apartments. Part of the jump is caused by younger people moving out of their parents’ homes for the first time or after moving back home because of the pandemic. The Dallas-Fort Worth area led the demand in the second quarter with more than 15,000 apartments. 

Demand for rental apartment properties may continue to rise or maintain its current pace. The exact outlook is still unknown. However, there are 625,000 apartments currently being constructed and apartment completions have hit 95,000. It remains to be seen if demand will keep pace with the high delivery rate of apartments. 

For landlords and property managers, the figures reported above are great news. As long the demand for rental properties continues at this rate, there should be more than enough tenants for everyone, even with new rental construction. With the uncertainty of 2021 hopefully finally behind us, the future looks bright for rental apartments. To learn more about property management, visit Illume Property Partners.

Source:
National Apartment Association