Average rents in the U.S. rose 6.3 percent in the past 12 months to an all-time high of $1,150.
According to a monthly survey conducted to Yardi, rents also rose by 1.3 percent month over month in June.
West Coast and Sunbelt markets are largely responsible for the overall growth in year-to-year rents. Spanning June 2014 to June 2015, rents have risen by a nation-leading 15.1 percent in Portland, Oregon. Jacksonville, Florida, ranks second with 13.2 percent growth.
Denver (12.4 percent growth), San Francisco (11.6 percent) and Sacramento (11 percent) round out the top five best-performing markets. Atlanta and Seattle both saw more than 8 percent growth.
Some of these top markets — or submarkets within these markets — still present opportunities to developers, as they are undersupplied. Yardi cites Sacramento, suburban Atlanta and the Seattle submarket of Tacoma as underserved locales.
During the past 12 months, Sacramento has added only 1,443 units. In suburban Atlanta, 1,168 units have been added to the inventory during the same period. Amidst 7 percent rent growth, Tacoma delivered 1,470 units year over year in May.
Spanning June-to-June, rents trailed the long-term average in only a handful of markets, with six failing to achieve 4 percent growth. These markets include:
- Richmond, Virginia (1.4 percent)
- Baltimore (2.5 percent)
- Washington, D.C. (2.7 percent)
- Philadelphia (3 percent)
- Albuquerque (3.2 percent)
- Kansas City (3.5 percent)
Yardi partially attributes the overall rapid growth in rents to seasonality, as rentals typically performance well in the spring. However, the one-month and three-month increases represent the fastest rent growth in several years.
In the last three months, rents rose by 2.9 percent, with a rise of 1.3 percent occurring from May to June.
Continued rent escalation in San Francisco, Denver, Jacksonville and Portland accounted for much of the average rent increase in June. Yardi also cited increased demand for higher-end product as an additional reason for rental growth.
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