Apartment Retention rates slip from all-time peaks but remain unusually high.

By Jay Parsons via LinkedIn in the #Multifamily Group

Rental Housing Economist (Apartments, SFR) and PropTech VP

Apartment renters continue to renew expiring leases far more often than usual, but not quite at the all-time peak levels seen earlier. Retention rates — which are highly seasonal — have been moderating since early 2022, and that pattern continued in August. 

Of renters with expiring leases, 54.8% signed renewals, and with a typical renewal rent increase of 11%. That’s the second-highest August on record, but it’s down considerably from last year, when retention skyrocketed up to 58.1%.

Bottom line: This is more evidence of the “past the peak, but still a tight market” narrative. We’re seeing a return to normal play out in supply availability, and that’s taking resident retention closer to normal levels.

Like with rent growth moderating, this normalization in retention was widely expected in 2022, so it’d be a rush-to-judgment to blame rent increases entirely — although certainly they play some role as does broader inflation. Retention rates in the upper 50% range were unprecedented, and highlighted a lack of alternatives for renters looking to move (whether to buy or to rent). We’re now seeing modest increases in housing supply, which is likely impacting retention — particularly at the top end of the market. To that point, retention rates declined most year-over-year in higher-priced Class A apartments which compete with new supply.

Retention rates remain highest in Class C, where vacancy is also lowest and there are fewest alternatives. Rent increases are also much lower in Class C, but as noted in previous posts, Class C renters are most impacted by broader inflation (particularly the 13% increase in groceries), so we’re watching to see if retention falls and more renters double up.

By metro area, retention rates moderated year-over-year in 45 of the nation’s 50 largest markets. It’ll surprise no one to hear that the biggest declines came in Phoenix (which we’ve posted about quite a bit) and Las Vegas. Other metros with sizable drops included (with no real theme here): Riverside, Seattle, Richmond, Sacramento, and South Florida.

#apartments #multifamily #rentals #housing

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Fed mulls further hike to cap inflation

By Harriet Sinclair, Editor at LinkedIn News

The Federal Reserve is considering another interest rate hike of 0.75 percentage points at its September meeting, according to The Wall Street Journal, citing data from CME Group. The Fed has taken an aggressive approach to rates, hiking them by 0.75 percentage points in both June and July. Fed Chair Jerome Powell commented in August that the bank retained its commitment to lowering inflation, which remains at decades-high levels, even though the move could increase unemployment. “We will keep at it until we are confident the job is done,” Powell said.

• The market is anticipating a 0.75 percentage point rate hike, with traders pricing in the potential move.

John Toohig• Head of Whole Loan Trading at Raymond James• 

Fed watch. Remember, Nick Timiraos is the guy who got the call ahead of time for the “leak” of the first 75bps hike. His comments:

“Federal Reserve Chairman Jerome Powell’s public pledge to reduce inflation even if it increases unemployment appears to have put the central bank on a path to raise interest rates by 0.75 percentage point rather than 0.50 point this month”

After the Sept meeting, we have two more before year end. What’s next is the question? Another 75bps? 50bps? Further comments: 

“They face two main questions heading into their Sept. 20-21 meeting that are likely to determine whether to approve another 0.75-point rate rise: How much higher do they expect to raise rates in coming months, and what steps do they take to get there?”

“Several officials have signaled a desire to raise the fed-funds rate closer to 4% by year’s end—or about 1.5 percentage point higher than its current level. That could be accomplished in rate increases of various sizes at each of the three remaining Fed meetings this year”

“The hawkish approach would point to a 0.75-point rate rise at the coming meeting, followed by smaller increases at the next two, analysts said”

“Another option would be to raise rates by a half percentage point at each of the remaining meetings this year”

“Officials are trying to convey their expectations that rates will need to stay higher for longer, and “one way to send that message is with a third 0.75-point hike”

#rates #economy #fed

Kim Kardashian strikes again.

Kim Kardashian starts PE shop: Kim Kardashian is launching a private equity firm with a long-time Carlyle Group executive to invest in consumer and media brands. The new firm, SKKY Partners, is yet another bullet to the tycoon’s multi-billion dollar portfolio. Her shapewear and clothing brand, SKIMS, was most recently valued at $3.2 billion. 

Titan’s Takeaway: Starting a PE firm seems like a logical next step for the Kardashian empire. With Kim K’s endorsement, you’ll get the money plus about a billion eyes on your business – and for start-ups, social capital can be just as powerful a tool as cash.

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