It might be harder to negotiate your rent this year if you live in an apartment.
After two years of growing slower than the national average, rents in the Triangle once again outpaced the rest of the nation last year.
In 2018, rents for multifamily apartments in the Triangle grew by 3.8 percent to an average rent of $1,105 per month, according to apartment data company RealPage. The national average was 3.3 percent.
The good news, however, is that the actual amount people pay for rent across the Triangle is still much lower than the national average. The average rent across the U.S. is now $1,353 per month — more than $200 per month than the Triangle.
“That rent compared to the national average is pretty affordable,” Carl Witaker, manager of market analytics at RealPage, said in a phone interview.
Two of the Triangle’s Sun Belt peers for example, Nashville and Atlanta, both have average rents hovering around $1,200 per month, according to RealPage. While, in North Carolina, Charlotte’s average rent is closer to the Triangle’s average at around $1,100 per month and the Triad is closer to $800 per month on average.
So, what explains the slowdown and then rebound of rent growth in the Triangle? The number of new jobs, Witaker said.
While, the number of apartments being built over the past few years has hovered consistently around 5,000 units per year, it is the fluctuation in job growth that explains some of the slowdown in rent increases the region saw in 2016 and 2017. In 2017, for example, rents only grew by 2 percent.
“Raleigh and Durham has had some really good job growth over this cycle,” Witaker said, noting that the number of jobs in Raleigh has grown by 28 percent since 2010.
“But in 2017 we saw it slow down just a little bit.”
In 2017, job growth in the Triangle was 2.1 percent over the previous year, while in 2016 it had been 2.9 percent. That’s not a huge slowdown, Witaker notes, but in concert with an aggressively growing supply of apartments it “caused a hiccup.”
“Somebody has to fill those units being built, and when job growth is accelerating, then you have more people to fill those units,” he added.
And, in 2018, job growth crept back up to 2.5 percent, and with it the growth in rental prices also inched up.
Occupancy rates — the percentage of apartments that are being rented — in 2018 were also the highest they had been in nearly 20 years, according to RealPage’s data that goes back to the mid-1990s. In the third quarter of last year, the occupancy rate in the Triangle hit 95.3 percent, which was the highest rate since 2001, according to RealPage.
Witaker said that he thinks the market is still finding an equilibrium and RealPage estimates that rental prices will likely increase by 2.5 percent to 3 percent in 2019. For comparison, the company expects rental prices to increase by more than 3 percent in Charlotte.
What does that mean for renters here? More competition for apartments and less room to negotiate if job growth keeps up with last year’s pace. While you are still likely to find newer apartment buildings offering a month’s free rent to new tenants, at apartments that are just a little bit older, you likely won’t see many sweet deals. (Last year, new apartments were often giving away six weeks worth of rent to new tenants, Witaker said.)
“You’ll probably have less negotiating room” this year, Witaker said. “Maybe somebody will have already inquired about (your) unit — where maybe past years there hadn’t been any inquiries.”