Rents in the highest-quality apartments rose 4.4% last year, including an 8.0% jump in one West Coast portfolio. With a very high occupancy level (95.8%) and job growth exceeding construction levels in almost every major market in the country, landlords will continue to raise rents throughout the remainder of the year.
While the number of tenants leaving to buy homes remains low—only 14.7% of renters moving versus a norm of 17% since 2002—we believe more tenants will choose to become homeowners soon. The following table and chart come from a report we prepare that compiles the results of the publicly traded apartment REITs. We find this to be the most pertinent rental market data for home sales because these represent hundreds of thousands of high-income renters.
In summary, $70+ per month rent hikes are a great kick in the pants to go buy a home if you have been thinking about buying a home anyway. We expect the landlords to keep raising rents aggressively until they start to hurt their own occupancy numbers.