Today I would like to examine the Dayton Market, and how the rental rates have shifted over the past 24 months and how its market activity compares to the composite data set. It should be noted that I am using Yardi Matrix to procure the data, I prefer it to other data providers, and I find the platform easy to use and intuitive compared with others.
Now, as we examine the data in Dayton VS the composite set the first thing that sticks out to me is that the distinguish between Discretionary rentals and Upper Mid-Range rentals is nearly identical, with the rates for the Discretionary actually dropping below the Upper Mid-Range in Q3 2018. The spread between them in Q1 2018 is only $34 in Q1 2018 whereas in the composite set the spread is $253 in the same time period. What’s more astonishing to me is that in Q4 2019 the Upper Mid-Range is higher than the Discretionary rents by $32; whereas in the composite data set the discretionary rents are $287 apart. Nonetheless the rents in each category rose across the time period, discretionary was the laggard of the category at only a 2.1% increase over the period, and Upper Mid-Range showed the strongest with 7.9% over the same period.
The increases over time across each category in Dayton as compared to the data set is interesting also. In the composite data set we saw an average increase in rents over the period of 7%, with most of the data points falling pretty close to the mean, +/- 0.5% with the Upper Mid-Range showing the weakest increase, and the outlier in the limited data set of only a 5.1% increase. However, in Dayton, we see the opposite, with Upper Mid-Range showing the strongest increases in percentages and in actual dollars. What I draw from this data is that the market not as healthy as the whole of the composite data set, and the discretionary renters have their pick of the units they would like to lease. To me that Upper Mid-Range category is the healthiest and I believe still likely has room to grow.
Now, as we examine the data in Dayton VS the composite set the first thing that sticks out to me is that the distinguish between Discretionary rentals and Upper Mid-Range rentals is nearly identical, with the rates for the Discretionary actually dropping below the Upper Mid-Range in Q3 2018. The spread between them in Q1 2018 is only $34 in Q1 2018 whereas in the composite set the spread is $253 in the same time period. What’s more astonishing to me is that in Q4 2019 the Upper Mid-Range is higher than the Discretionary rents by $32; whereas in the composite data set the discretionary rents are $287 apart. Nonetheless the rents in each category rose across the time period, discretionary was the laggard of the category at only a 2.1% increase over the period, and Upper Mid-Range showed the strongest with 7.9% over the same period.
The increases over time across each category in Dayton as compared to the data set is interesting also. In the composite data set we saw an average increase in rents over the period of 7%, with most of the data points falling pretty close to the mean, +/- 0.5% with the Upper Mid-Range showing the weakest increase, and the outlier in the limited data set of only a 5.1% increase. However, in Dayton, we see the opposite, with Upper Mid-Range showing the strongest increases in percentages and in actual dollars. What I draw from this data is that the market not as healthy as the whole of the composite data set, and the discretionary renters have their pick of the units they would like to lease. To me that Upper Mid-Range category is the healthiest and I believe still likely has room to grow.
Next we take a look at how the actual dollars changed from quarter to quarter. 2018 was not a kind year for the Discretionary category in Dayton as in the Q2 2018 it saw a decrease of $30 from the previous quarter and then again it fell, this time by $44 in Q3 2018. The class did make up most of its losses in Q4 2018 with an increase of $60, however it was not enough to makeup for the losses sustained earlier in the year. Q2 2018 was difficult too for Upper Mid Range, our star over the period, and Workforce Lower, however for the remaining quarters none saw dramatic gains or losses. It should be noted though that Q1 2019 was the healthiest for Upper Mid-Range, Lower Mid-Range and Workforce Lower, with increases in rates of $26, $16 and $9 respectively.
Comparatively Q1 2019 was not healthy for the Upper Mid-Range as it was for Workforce-Upper and Workforce Lower in Cincinnati; for that period Upper Mid-Range saw a loss in rental rates of $5 but Workforce Upper and Workforce Lower each saw health increases of $10 and $15 respectively.
When we look at the same period for the composite data set, Q1 2019, we see that only Discretionary and workforce lower saw substantial increases of $21 and $9 respectively. To me this shows that Dayton is a lagging market as compared to the other two being discussed.
Comparatively Q1 2019 was not healthy for the Upper Mid-Range as it was for Workforce-Upper and Workforce Lower in Cincinnati; for that period Upper Mid-Range saw a loss in rental rates of $5 but Workforce Upper and Workforce Lower each saw health increases of $10 and $15 respectively.
When we look at the same period for the composite data set, Q1 2019, we see that only Discretionary and workforce lower saw substantial increases of $21 and $9 respectively. To me this shows that Dayton is a lagging market as compared to the other two being discussed.
Finally, let’s look at the %’s and how they fared through the period. Not surprisingly the graphs for both the $ changes and the % changes look nearly identical.
In examining the data, with the exception of the Discretionary period, the rental rate increases as measured by percentages (%) is relatively flat quarter to quarter with 2.2% being the most significant quarter over quarter increases, excluding the wild swings of Discretionary, and what was done by Upper Mid-Range.
My takeaway from this analysis is that Dayton is a market in which caution and patience is going to win the day. If I am investing in Dayton, I would look at the workforce or Mid-Range categories, and I would think that even these are relative compared to the other cities in the composite, but also the whole market as well.
In examining the data, with the exception of the Discretionary period, the rental rate increases as measured by percentages (%) is relatively flat quarter to quarter with 2.2% being the most significant quarter over quarter increases, excluding the wild swings of Discretionary, and what was done by Upper Mid-Range.
My takeaway from this analysis is that Dayton is a market in which caution and patience is going to win the day. If I am investing in Dayton, I would look at the workforce or Mid-Range categories, and I would think that even these are relative compared to the other cities in the composite, but also the whole market as well.
