By pulling a series of simple reports from our data service providers we can see how the rates have shifted over the trailing 8 quarters (2 calendar years).
Our first chart and corresponding graph shows the rental rates across asset classes. The largest rental rate increases occurred in the discretionary asset class amounting to $99 over the time period. This increase in the discretionary market class amounted to a 6.5% increase over the period. However, the largest percentage increase occurred in the Workforce – Lower asset class amounting to a 7.5% or $49 over the time period.
Our first chart and corresponding graph shows the rental rates across asset classes. The largest rental rate increases occurred in the discretionary asset class amounting to $99 over the time period. This increase in the discretionary market class amounted to a 6.5% increase over the period. However, the largest percentage increase occurred in the Workforce – Lower asset class amounting to a 7.5% or $49 over the time period.
Our next chart and corresponding graph show the actual increases, quarter to quarter, across the three markets. What is interesting to see is that the increases are strong through 2018 and into Q2 of 2019; however, we see a drop in the dollars increasing starting in Q3 2019 and then negative rent increases in Q4 2019. I believe this is due in part to the oversupply we’re seeing in Columbus in particular. Its no secret that the market has seen tremendous growth over the current market cycle with lots of new units having been added, and as such renters have a choice, and properties are having to compete for those tenants.
The bright spot in this data is that the Workforce - Upper and Low Mid-Range properties have been pretty consistent throughout the timeframe, however too were not immune to the rate increase drops.
The bright spot in this data is that the Workforce - Upper and Low Mid-Range properties have been pretty consistent throughout the timeframe, however too were not immune to the rate increase drops.
The final analysis of the rental rates and trends over the previous 23 months focuses on the percentage changes across the time period across the asset classes. Here we can see how rent levels behaved quarterly throughout the time period. The trend outlined above, of a strong 2018 into Q2 of 2019 persists here with the Low-Mid Range housing seeing the strongest percentage rent level increases of 1.8% quarter over quarter in Q2 2018 and Q2 2019. Evaluating the data though it appears that the Workforce-Upper was the most consistent performer of rent increases, finishing with a 0.8% rent increase in Q4 2019 while all the others were nearly flat if not negative.
What the data shows is that rents are still rising, though over the past two quarters at a much slower rate than previously. What we can take from this is that the rental market may be cooling for renters. However, the demand from investors has not ebbed to this pointe, perhaps though, it could. If you and your partners are interested in a confidential valuation of any of your assets please reach out to me at Stash@Capstone-Companies.com or on my cell at 513.417.5588.
Sincerely,
Stash
Sincerely,
Stash