The multifamily market has so far had a solid 2018, with rent growth of 3.1 percent.

Demand continues to be the main driver. Household formation is running at roughly 1.5 million per year, helping fill the 300,000 multifamily units of new supply, according to the Multifamily National Report for November 2018 from Yardi Matrix. Occupancy rates of stable properties have remained above 95.0% for over two years. Robust job growth and a long-term population shift have propelled warm-weather and West Coast metros.

Las Vegas (7.4% year-over-year) and Phoenix (6.6%) have the highest rent growth, while Atlanta (5.4%), Orlando (5.2%) and Tampa (3.9%) are all among the top metros.

Despite the brush with rent control (which failed to win a referendum in the November election) and increasing problem with affordability, rents continue to march upward in California. The Inland Empire (5.4%), San Jose (5.0%), Los Angeles (4.2%), San Francisco (4.0%) and Sacramento (3.8%) are all among the top 10 metros in rent growth.

Job growth ranges between moderate and robust in those metros, but the big issue in most of the state is supply; California desperately needs new stock to house the number of people that want to live there. The five California metros in the top 10 for rent growth all are among the bottom seven in deliveries as a percentage of stock. Sacramento and the Inland Empire are growing at less than 1% per year, while San Francisco, San Jose and Los Angeles are adding less than 1.5% to stock per year.

The metros with the highest supply pipelines are maintaining occupancy rates and moderate rent growth. That includes Nashville (6.5% supply growth, 2.6% rent growth), Austin (5.0%, 3.5%), Denver (4.9%, 2.8%) and Miami (4.2%, 3.4%). On the flip side, Houston’s rent growth lags at 1.3% despite healthy job creation numbers.