Written by The Business Journal Staff
A rebounding economy had rents in many major metropolitan markets around the country hitting an eight-year high in July, according to the latest report from the U.S. Labor Department. But another recent report issued this week by a Wisconsin company claims Fresno is bucking that trend.
ABODO, an apartment-hunting website based in Madison, said this week that rental rates in Fresno actually decreased 5 percent last month, ranking the city No. 7 nationally in terms of biggest one-month price drops.
“We believe that a steady decline in rent prices in metro areas like Fresno may be on the way,” said Sam Radbil, senior communications manager at ABODO.
Some Valley real estate professionals disagree with the ABODO report, saying they do not see the Fresno rental market as “plateauing” or “softening.”
Robin Kane, senior director at Berkadia in Fresno, called the ABODO report “way off.” Kane cited several other recent reports, including a report from respected real estate tracking firm AXIOMetrics, which shows Fresno rents increasing by nearly 8 percent between June 2015 and June 2016 — and area occupancy rates at 95.4 percent.
After reviewing the ABODO report, Kane said it was like comparing “apples to peaches.”
“You have to compare year-over-year numbers,” he said. “Single monthly figures don’t tell you that much. Statistics can always be manipulated.”
Kane also suspected ABODO was using home rental data in addition to apartment rental rates. “They are only a two-year-old company and I’m guessing in order to build up their database, they are curating information from other sites like Craigslist,” Kane said. “That can be very misleading.”
The ABODO report doesn’t take into account the “seasonality” of the marketplace, Kane added. Gauging rent increases or declines by a single month “makes absolutely no sense.”
Kane, who typically handles more than $100 million a year in multi-family real estate sales, characterized Fresno’s current rental market as “tight.”
“Vacancies are sub-five percent and many owners are in the process of raising rents,” he said.
“What’s not happening around the Valley is any major new construction, Kane added. “If you have an economy that’s recovering and no new supply coming on the market, prices are going to rise.”
Nationwide, developers delivered 250,000 new rentals in 2015, and the forecast is for 285,000 more units to be finished in 2016, Radbil said. “As we’ve seen in the past, as vacancy rates increase and more rental units become available, prices should begin to decrease.”
ABODO’s latest National Apartment Report singled out Houston — where the company said rents fell 14 percent in July — as the U.S. city recording the biggest recent rent decreases.
“Houston’s economy, though diverse, is still dominated by the energy sector. And falling oil prices have had ripple effects throughout the city, slowing economic growth. A downtick in jobs, coupled with what is now a surplus of housing, might explain a 14 percent decrease in average rent from July to August,” the report stated.
Other major metros seeing the biggest rent drops according to ABODO: Mesa, Arizona, and Cleveland, Ohio (9 percent); Toledo, Ohio (8 percent); Lincoln, Nebraska (8 percent) and Miami (6 percent).
Inversely, the cities seeing the largest rent increases during July, according to ABODO, were Minneapolis (14 percent); Nashville (13 percent); Portland, Oregon (12 percent) and Baltimore (12 percent).
“Emerging tech centers like Minneapolis, Nashville and Portland are becoming increasingly attractive alternatives to a crowded — and expensive — Silicon Valley. But it might not be all positive for renters: In the month of August, rents in those cities made sizable increases,” the report noted.
Rents nationally are at their highest levels since Jan. 2008, according to the U.S. Labor Department. Analysts cite a lack of supply, tight credit markets and a move away from home ownership since the housing crisis with fueling the rise in rents.