Despite skepticism regarding the sustainability of this longlasting multifamily cycle, recent reports from MPF Research point toward more light left at the end of the tunnel. MPF’s secondquarter study said that although 2016 started out slow, demand gained momentum across the country’s largest 100 metro areas, adding 127,402 occupied units.That was one of the largest quarterly increases in recent years, topping 2015’s second quarter demand volume by 23 percent, and when compared to completions of 67,550 units for the same time period, you can see why the average occupancy inched up to 96.2 percent. That is a record occupancy level, not seen since the height of the tech boom in 2000 and 2001.
While occupancies rose, so did average rents. New residents’ rental rates climbed 1.8 percent during the second quarter. Nationally, annual rent growth has been positive for 24 consecutive quarters, with the average price increasing during the same periods at 3.8 percent. The last comparable cycle – in the tech boom of the mid2000s – had a growth cycle that lasted 19 quarters.Locally, we are experiencing much of the same, albeit on a smaller scale.
From the end of 2014 to the end of 2015, Oklahoma City had rent growth of 4.52 percent. Like the national numbers, that growth hasn’t been rivaled since 2000, when it was 4.5 percent. In the past four years, Oklahoma City has averaged 3.97 percent in annual rent growth, which is above the historic average of 3 percent for the last 25 years. Likewise, in 2015 there were 2,472 new units added to Oklahoma City’s inventory, and 2016 isn’t letting up with just over 3,000 to come online.
“With so much additional product finishing very quickly, the apartment leasing environment could become more competitive in the short term,” RealPage chief economist Greg Willett said about the national housing market.
That statement applies equally to the Oklahoma City housing market. Is the entire market about to experience the softening already felt in smaller pockets such as that felt along Interstate 35 in Moore where concessions are very competitive? Has the Quail Springs area – or even the beloved downtown – positioned itself to be the next soft area where potential residents obtain the upper hand? One thing is certain: We are in a very different economic situation than we have been in before.