Market Watch 2017: What Property Managers Need to Know

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# 2016 Axiometrics Inc. ALL RIGHTS RESERVED.

2016 Axiometrics Inc. ALL RIGHTS RESERVED.

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2016 Axiometrics Inc. ALL RIGHTS RESERVED.Apartment Market Overview: Where Have We Been and Where Are We Going?AppFolio November 10, 2016

2016 Axiometrics Inc. ALL RIGHTS RESERVED.National TrendsWhat are we seeing nationwide?

Market-Specific TrendsNow that we know national trends, what are some noteworthy metro areas?

ForecastWhat do we see happening in 2017?

Key TakeawaysSummarizing apartment industry dynamics and Q&A Outline


2016 Axiometrics Inc. ALL RIGHTS RESERVED.News Media on the Multifamily SectorAre we in a downturn? Approaching one?


2016 Axiometrics Inc. ALL RIGHTS RESERVED.Econ 101Supply = new apartment constructionDemand = job growthQuantityPrice


2016 Axiometrics Inc. ALL RIGHTS RESERVED.National Overview

2016 Axiometrics Inc. ALL RIGHTS RESERVED.National Performance by SubmarketCompared to cycle (2010 current), performance isnt all that badSource: AxiometricsEffective Rent Growth (ERG)


2016 Axiometrics Inc. ALL RIGHTS RESERVED.Year-to-Date Effective Rent GrowthFair comparisons to 2013? 2016Source: Axiometrics


2016 Axiometrics Inc. ALL RIGHTS RESERVED.Rent Growth, Cycle Average, and Long-Term AverageRent growth is now below cycle average, but still above long-term averageSource: AxiometricsAnnual ERG by Month



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Rent Growth, Cycle Average, and Long-Term AverageRent growth is now below cycle average, but still above long-term averageSource: AxiometricsLong Term Average Annual ERG by Month



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Rent Growth, Cycle Average, and Long-Term AverageRent growth is now below cycle average, but still above long-term averageSource: AxiometricsLong Term AverageCycle Average (2010 2016)Annual ERG by Month



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Annual Effective Rent Growth by MSA2015 (Full Year)

Source: Axiometrics30 green dots


2016 Axiometrics Inc. ALL RIGHTS RESERVED.Annual Effective Rent Growth by MSAData as of October 2016

Source: Axiometrics19 green dots



Annual Effective Rent Growth by MSAData as of October 2016Market AverageNote excludes submarkets with fewer than 2,500 unitsSource: Axiometrics


2016 Axiometrics Inc. ALL RIGHTS RESERVED.Annual Effective Rent Growth by MSAData as of October 2016

Market AverageERG by Submarket

Note excludes submarkets with fewer than 2,500 unitsSource: Axiometrics


2016 Axiometrics Inc. ALL RIGHTS RESERVED.Job Growth ForecastJob growth expected to average 1.7% over next 5 yearsJob Growth20100.5%20111.5%20121.6%20131.8%20142.1%20152.0%2016F1.7%2017F1.5%2018F1.7%2019F1.9%2020F1.7%2021F1.4%

Sources: Axiometrics, BLS


2016 Axiometrics Inc. ALL RIGHTS RESERVED.Economic Expansion in Months (Post-Recessions)Currently in third longest post-war expansion how long until next recession?Sources: Axiometrics, St. Louis Fed


2016 Axiometrics Inc. ALL RIGHTS RESERVED.Long-Term Residential PermittingSingle-family well below long-term average, suggesting a housing shortfallSources: Axiometrics, Census


2016 Axiometrics Inc. ALL RIGHTS RESERVED.National Asset Class PerformanceSource: Axiometrics

2016 Axiometrics Inc. ALL RIGHTS RESERVED.#

2016 Axiometrics Inc. ALL RIGHTS RESERVED.Annual Rent Growth by Asset ClassSource: Axiometrics

2016 Axiometrics Inc. ALL RIGHTS RESERVED.#

2016 Axiometrics Inc. ALL RIGHTS RESERVED.Seattle, Washington


Seattle Annual Effective Rent Growth by Submarket20142015October 2016Source: Axiometrics


2016 Axiometrics Inc. ALL RIGHTS RESERVED.Seattle Job Growth (2011 2016)Sources: Axiometrics, BLSNearly 4% job growth back in July


2016 Axiometrics Inc. ALL RIGHTS RESERVED.Seattle Rent and Job Growth (1997-2021F)Annual Effective Rent GrowthJob Growth20167.2%3.3%2017F2.8%2.2%2018F3.7%2.0%2019F4.6%2.3%2020F3.6%1.9%2021F2.7%1.4%



2016 Axiometrics Inc. ALL RIGHTS RESERVED.Seattle New Supply (2016 to 2021F)Supply projected to peak in 4Q17Source: Axiometrics


2016 Axiometrics Inc. ALL RIGHTS RESERVED.Denver, Colorado

2016 Axiometrics Inc. ALL RIGHTS RESERVED.Year-to-Date Effective Rent Growth DenverSource: Axiometrics

Very strong post-recovery period



Denver, CO Annual Effective Rent Growth by Submarket

20142015October 2016Source: Axiometrics


2016 Axiometrics Inc. ALL RIGHTS RESERVED.Denver Rent and Job Growth (1998 2021F)Sources: Axiometrics, BLS



Denver Effective Rent Growth by Submarket Source: Axiometrics

2015

Oct. 2016


2016 Axiometrics Inc. ALL RIGHTS RESERVED.Phoenix, AZ

2016 Axiometrics Inc. ALL RIGHTS RESERVED.3Q 2016 Rent Growth Performance by MetroPhoenix ranked fifth for quarter among top metros3Q 2016 Rent Growth by Metro RankingsRankMetroAnnual Rent Growth1Sacramento, CA11.0%2Portland, OR8.0%3Seattle, WA7.4%4Riverside, CA7.4%5Phoenix, AZ6.7%6San Diego, CA6.6%7Fort Worth, TX6.5%8Salt Lake City, UT6.5%9Tampa, FL6.4%10Nashville, TN6.4%

Source: Axiometrics



Phoenix, AZ Annual Effective Rent Growth by Submarket20142015October 2016

Source: Axiometrics


2016 Axiometrics Inc. ALL RIGHTS RESERVED.Phoenix New Supply and Rent Growth (2016 to 2021F)Source: Axiometrics


2016 Axiometrics Inc. ALL RIGHTS RESERVED.Residential Permitting in PhoenixLots of single family housing prior to housing crash

Very little pre-crash multifamily housingSources: Axiometrics, Census


2016 Axiometrics Inc. ALL RIGHTS RESERVED.Phoenix Rent and Job GrowthAnnual Effective Rent GrowthJob Growth20166.1%2.5%2017F2.7%2.2%2018F3.5%2.6%2019F4.2%2.9%2020F3.4%2.4%2021F2.7%2.1%



2016 Axiometrics Inc. ALL RIGHTS RESERVED.Houston, Texas

2016 Axiometrics Inc. ALL RIGHTS RESERVED.20142015October 2016

Source: AxiometricsHouston Annual Effective Rent Growth by Submarket


2016 Axiometrics Inc. ALL RIGHTS RESERVED.Employment in HoustonSources: Axiometrics, BLS


2016 Axiometrics Inc. ALL RIGHTS RESERVED.Oil & Gas Sector in HoustonSources: Axiometrics, EIA


2016 Axiometrics Inc. ALL RIGHTS RESERVED.Houston New Supply (2011 to 2021F)Supply projected to peak in 2Q17Source: Axiometrics


2016 Axiometrics Inc. ALL RIGHTS RESERVED.Houston Rent Growth and Occupancy RatesRent growth looks like a recession, but occupancy rates holding upSource: Axiometrics


2016 Axiometrics Inc. ALL RIGHTS RESERVED.Houston Rent Growth and Occupancy RatesRent growth looks like a recession, but occupancy rates holding upAnnual Rent GrowthJob Growth2016-1.4%0.5%2017F0.6%1.3%2018F3.3%1.9%2019F4.1%2.6%2020F3.4%2.5%2021F2.6%2.1%

Source: Axiometrics


2016 Axiometrics Inc. ALL RIGHTS RESERVED.San Francisco Bay Area

2016 Axiometrics Inc. ALL RIGHTS RESERVED.Year-to-Date Effective Rent Growth San Francisco Area Source: Axiometrics


2016 Axiometrics Inc. ALL RIGHTS RESERVED.Year-to-Date Effective Rent Growth San Francisco Area Source: Axiometrics


2016 Axiometrics Inc. ALL RIGHTS RESERVED.San Francisco Bay Area Why the Sudden Slowdown? Source: Axiometrics

3Q153Q16


2016 Axiometrics Inc. ALL RIGHTS RESERVED.San Francisco Bay Area Why the Sudden Slowdown? Source: Axiometrics

Job growth slowed 3%Rent growth slowed 12%3Q153Q16


2016 Axiometrics Inc. ALL RIGHTS RESERVED.Lease Up Trends and Concession ValuesSource: Axiometrics


2016 Axiometrics Inc. ALL RIGHTS RESERVED.San Francisco New Supply and Rent Growth Source: Axiometrics


2016 Axiometrics Inc. ALL RIGHTS RESERVED.Forecast

2016 Axiometrics Inc. ALL RIGHTS RESERVED.Rent Growth and Job Growth 2016



2016 Axiometrics Inc. ALL RIGHTS RESERVED.Rent Growth and Job Growth 2017F




Positive Headlines


2016 Axiometrics Inc. ALL RIGHTS RESERVED.Media reports imminent downturn, but its more complicated than that

Performance is relative:Relative to the market youre inRelative to the submarket youre inRelative to your price pointRelative to your comparison time period

In general, the industry is doing well: expect moderation and compression across markets

How will my market perform? Remember your economics: supply vs. demandKey Takeaways



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2016 Axiometrics Inc. ALL RIGHTS RESERVED.Cumulative Rent Growth by Market and Submarket2011 to 2016Source: Axiometrics



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Demographic Drivers


2016 Axiometrics Inc. ALL RIGHTS RESERVED.Concessions by Floor Plan San Francisco Bay AreaSan Francisco Bay AreaSource: Axiometrics



Real Estate

Market Watch 2017: What Property Managers Need to Know