Annualized effective rent growth rose to 4.7 percent in November, the biggest increase of the year and the highest since August 2011 when the rate measured 5.0 percent.

According to research from Axiometrics, November’s rent-growth rate was a 38-basis-point increase from the 4.3 percent recorded in October and the largest growth margin since the 39-bps increase from February-March 2011 (4.6 percent and 5.0 percent, respectively).

The November year-to-date (YTD) effective rent growth of 5.0% keeps 2014 as the apartment market’s strongest post-Great Recession year.  Since the recovery began, 2010 has generated the strongest year-end year to date rent growth at 4.6 percent, but 2014 is almost certain to exceed to beat that record.   A 49-bps drop in December would be required for 2014 to fall behind 2010, and the average November-December decline in the past four years has been 29.5 bps.

“The national apartment market continues to outperform all expectations,” said Jay Denton, Senior Vice President of Research and Analytics for Axiometrics. “As we’ve been saying for months, the combination of an improving job market, and a growing percentage of the population that prefers renting to owning, continues to boost apartment demand.”

Market Hits Top November Occupancy

Though the national occupancy rate continued its typical seasonal decline in November 2014, the rate of 94.8 percent is the highest recorded in any November since Axiometrics began reporting monthly in 2008.

The November 2014 occupancy rate represents a 14-bps decrease from October’s 94.9 percent, and a 39-bps rise from the 94.4 percent recorded in November 2013. Occupancy has been at 94.8 percent or higher for seven straight months and at 94.0 percent or above for 31 straight months.

“We typically anticipate a seasonal slowdown around this time of the year, but the November occupancy was still very strong,” Denton said.

More Hikes Ahead

The forecast for rent increases in 2015 is even more bullish despite the addition of 294,000 new apartments in 2014, 27.3 percent from the second quarter and 54.5 percent from third quarter of 2013. It’s also the fastest rate of completions since the second quarter of 2009, according to National Multifamily Housing Council.

Rents will continue to rise at about the same pace next year, according to forecasts by commercial real estate data provider Reis and the National Association of Realtors. “Rental markets are expected to remain tight in most urban markets across the U.S. in 2015.  As household formations pickup in 2015, rental apartments will generally be their first home. Rental vacancy rates remain at or near their lowest level since 2000, and rent growth exceeds inflation in most markets, forecasts Freddie Mac’s Chief Economist Frank E. Nothaft.

Northeast Returns to Top-Market List

There’s not much change among the list of top-50 apartment markets, except that the Northeast section of the United States is represented for the first time in several months.

Hartford enters the chart at No. 9, after recording negative effective rent growth as recently as December 2013. The Connecticut capital’s effective rent growth has increased by 702 bps in 2014 and 337 bps in the past six months.

No. 15 Nashville and No. 17 Las Vegas joined Hartford as newcomers on the top-17 list in November. Riverside, Fort Worth and Charleston dropped off. They are Nos. 19, 20 and 21, respectively.

Seattle, with a 31-bps decrease in annual effective rent growth in November, dropped from No. 9 in October to No. 16.

				Annual Effective Rent Growth				Occupancy Rate				Revenue Growth
Rank		MSA		Nov- 13		Nov- 14		Nov- 13		Nov- 14		Nov- 13		Nov- 14
1		Oakland, CA		7.2%		13.0%		96.1%		96.5%		6.9%		13.4%
2		San Jose, CA		7.8%		11.3%		95.9%		96.2%		8.3%		11.6%
3		Denver, CO		7.3%		10.4%		95.4%		96.0%		7.7%		11.0%
4		San Francisco, CA		8.2%		9.3%		96.1%		96.2%		9.6%		9.4%
5		West Palm Beach, FL		3.9%		9.1%		95.3%		95.7%		5.2%		9.5%
6		Sacramento, CA		4.5%		9.0%		95.8%		95.9%		6.4%		9.1%
7		Atlanta, GA		5.5%		7.6%		93.5%		93.9%		6.6%		8.0%
8		Portland, OR		7.6%		7.2%		95.9%		95.8%		8.9%		7.1%
9		Hartford, CT		-3.0%		6.9%		94.8%		96.2%		-3.5%		8.4%
10		Fort Lauderdale, FL		2.4%		6.6%		94.8%		95.4%		2.9%		7.1%
11		Orlando, FL		2.9%		6.5%		94.3%		95.5%		3.1%		7.8%
12		Phoenix, AZ		3.1%		6.5%		93.3%		94.3%		3.1%		7.5%
13		Miami, FL		5.2%		6.3%		96.1%		96.1%		4.6%		6.3%
14		San Diego, CA		4.2%		6.0%		95.6%		96.3%		4.4%		6.7%
15		Nashville, TN		4.4%		5.9%		96.0%		95.6%		4.8%		5.6%
16		Seattle, WA		5.8%		5.9%		95.0%		95.2%		5.5%		6.0%
17		Las Vegas, NV		0.9%		5.8%		91.9%		93.0%		1.5%		7.1%
		National		2.7%		4.7%		94.5%		94.9%		2.9%		5.2%
Selected Other Markets
5		Cape Coral, FL		8.0%		11.5%		95.1%		95.4%		8.6%		11.7%
7		Stockton, CA		5.1%		11.0%		95.8%		97.6%		4.7%		12.8%
10		Honolulu, HI		-3.0%		9.6%		92.6%		94.4%		-5.6%		11.5%
14		Santa Rosa, CA		11.7%		9.1%		96.8%		96.7%		12.0%		8.9%
15		Palm Bay, FL		0.8%		9.0%		93.9%		95.4%		0.9%		10.7%