While metro Washington, DC seems to rank at the top of the list of just about everyone's favorite apartment markets, current performance stats actually are a little stronger in adjacent Baltimore.

June's occupancy rate in Baltimore's base of about 190,000 apartments stood at an even 96 percent, up 2.1 percentage points from the late 2009 figure and 0.7 points ahead of occupancy in Washington, DC. Neighborhood-level occupancy was right around the 95 percent mark in even the weakest of Baltimore's individual submarkets, and the rate was 97 percent or better in Ellicott City/Columbia and the Towson area.

Effective rents in metro Baltimore jumped by 4.2 percent during 2010's initial six months, measuring change on a same-store basis. Since rents only backtracked a very tiny bit previously, growth during the first half of this year has already more than made up the ground that had been lost. Baltimore's current average monthly rent of $1,107, then, is an all-time high.

Just like pretty much every other metro across the country, Jacksonville has seen its apartment market generate some performance momentum so far during 2010. However, this locale took one of the nation's worst beatings during the down portion of the market cycle, so it remains far from reaching healthy status once again.

Apartment absorption in Jacksonville registered at some 2,900 units during 2010's initial six months, far surpassing completions limited to around 500 apartments. Occupancy, then, has made big strides, rising 3 full percentage points since late 2009. Even with that upturn, however, the June occupancy figure was only 89.3 percent. That's the third worst reading across the 64 metros that form the core of MPF Research's national apartment analysis, coming in just ahead of the rates in Houston and Fort Myers.

With overall occupancy so low, it's not surprising that even the top-performing neighborhoods and product niches are struggling. The metro's best neighborhood-level result in submarkets with sizable apartment inventories is the 92.8 percent occupancy in the Mandarin area. Across the various product categories, 1990s-era properties are doing the best with occupancy at 92.5 percent.

Yesterday, there was lots of media coverage highlighting results of a survey that indicates quite a few of today's renters don't expect to ever become home buyers. Specifically, a Harris Interactive poll of about 2,000 folks conducted for real estate search site Trulia.com found that 27 percent of current renters don't anticipate that they'll eventually make the leap to home purchase.

Looking a little more closely at the survey info provided on Trulia's website, only 663 of the 2,000 people surveyed actually are renters, and there's no info provided on what type of housing (apartments, single-family homes, or something else) the renters are leasing. That seems like a pretty small sample to use when making broad-brush statements about a large and diverse group of renters, but let's go ahead and assume that the survey results are accurate. Do they, in fact, mean anything?

The Census Bureau reports that 66.9 percent of American households are homeowners, meaning that 33.1 percent rent. If 27 percent of those renters don't expect to buy at some point, the total pool of all households excluded forever from purchase is just 9 percent.

While 2nd quarter 2010's 1.2 percent jump in U.S. apartment rents was the first meaningful increase in pricing power seen during the current market cycle, the boost was encouraging widespread. It wasn't just a handful of areas getting back on track ... at least minor upticks occurred almost everywhere.

Across the 64 metros that form the core of MPF Research's apartment market analysis, 56 of them realized effective rent improvement during 2nd quarter, measuring change on a same-store basis. One city (Memphis) registered identical rents in March and June, leaving just seven metros suffering further declines. Quarterly losses of more than 1 percent were limited to Tucson, Las Vegas and New Orleans.

The strong quarterly showing pushed annual rent change into positive territory for a total of 25 metros as of June, up from just seven as of 1st quarter. The nation's top 10 performers for rent growth proved to be an incredibly mixed bunch in terms of general characteristics. They stretched from the East Coast to the West Coast. Some were large, others small. A few maintained their momentum after doing reasonably well during the national downturn, whereas others regained considerable ground that was lost during 2008-2009.

While almost every apartment market across the country has posted notably improved overall fundamentals during 2010, few can match the turnaround seen in Portland. The metro's stats looks good for both occupancy and rent change. And, perhaps most impressive of all, recovery is apparent in every single product niche across every single neighborhood.

Portland's apartment occupancy rate stood at 95.8 percent as of June. That's still a little below the peak readings seen in 2006-2007, when occupancy hovered around the 97 percent mark. But, it's important to realize that 2006-2007 wasn't a normal period for the metro. Today's occupancy performance, in fact, is a full percentage point over the norm logged during the past decade as a whole.

Nashville ranks among the U.S. apartment markets recording the most pronounced upturns in performance during 2010. Demand is coming in at very strong levels that well exceed deliveries, driving up occupancy quite rapidly and, in turn, stimulating rent growth.

MPF Research's calculations show Nashville apartment absorption during the January-June 2010 time frame at nearly 4,200 units, compared to roughly 1,000 units of new supply. Apartment demand in Music City perhaps was boosted a bit by flooding that damaged a portion of the total housing stock in May, but the impact doesn't appear to be especially significant. Pointing to that result, apartment demand during the first half of 2010 proved substantial throughout the metro, not just in the neighborhoods where flooding occurred.

Nashville's overall occupancy rate for apartments now has reached 94 percent, up 3.1 percentage points since bottoming at the end of 2009. Notable progress is occurring in all key submarkets except Sumner County, on the metro's far northeast side.

Improved occupancy allowed apartment operators to boost effective rents at an impressive clip of 4 percent during 2010's first half, with most of that growth occurring specifically during 2nd quarter. Year-to-date increases erased the losses seen in 2009's last half, taking annual rent change just past the breakeven point at a positive figure of 0.2 percent.

Building actually started recently on a couple of moderately-sized apartment communities totaling 311 units. However, the total stock under construction in the metro remains under control at just over 800 units, so it won't take much near-term demand to surpass completion levels.

Originally published on July 23, 2010, by Greg Willett

Apartment demand in Atlanta really took off during the April-June time frame, when just over 8,100 units were absorbed. That quarterly blast took demand during the first half of the year to nearly 11,300 units, far surpassing the concurrent completion count of about 2,900 units. Thus, occupancy is starting to rise. However, the metro's June occupancy rate of 90.3 percent still ranked among the nation's weaker performances. Thanks mainly to a little bit of pricing momentum seen in the urban core neighborhoods, effective rents edged up by 0.4 percent during 2010's 2nd quarter, but annual change remained significantly negative at -3.8 percent. Dwindling new supply volumes will help Atlanta's near-term performance move toward recovery, as ongoing development is down to a total of fewer than 2,100 units.

Performance Highlights are sneak peek views of the latest apartment market performance information from MPF Research. Check out their Apartment Market Reports for detailed findings, including results on the neighborhood level and analysis of factors shaping the shifts in conditions.

Going back to early 2010, Houston's apartment occupancy rate was the worst across the 64 major metros that form the core of MPF Research's national coverage. The metro's general positioning relative to other markets hasn't changed meaningfully over the past few months, but the Bayou City's metrics certainly are beginning to look better.

Roughly 9,900 apartments were absorbed in metro Houston during the April-June period, as quarterly demand topped concurrent completions for the first time in a year and a half. In turn, overall occupancy climbed an impressive 1.4 percentage points for the quarter. And operators even managed to squeeze out a 0.3 percent bump in effective rents over that time span.

Still, that progress only brought occupancy to 88.7 percent, about 5 percentage points under the national average. And the quarterly rent increase still left effective pricing 3.7 percent under the rates seen a year ago.

Robust Demand Boosts Apartment Occupancy and Rents

MPF Research starts rolling mid-year apartment market performance results this week, and we begin with a look at what preliminary figures show for the nation as a whole. The news is good any way you slice and dice the data.

Initial calcs point to absorption of another 116,000 units during 2nd quarter, taking demand for the first six months of the year to nearly a quarter million units. We're now on pace for calendar 2010 demand to come in at the second strongest annual volume seen over the past couple of decades, exceeded only when Hurricane Katrina evacuees boosted the absorption tally in 2005.

Obviously, the addition of some jobs is a big part of the demand story, but there's more to it than that. For example, renters are continuing to return to traditional apartments from individually-owned condos and single-family homes offered for lease. Also, some young adults who had combined into roommate living arrangement are splitting up into separate households. And an improving economy means that more parents are willing to guarantee leases in order to kick their perhaps under-employed kids out of the basement. A new element that seems to be emerging now is that some apartment demand is coming from folks who recently sold their homes. A lot of them were worried that they'd never be able to unload those units, so making another purchase right away is a pretty scary move.

Demand for apartments in Orange County came in at about 2,200 units during the initial three months of 2010. Early 2010 actually marked the metro's third consecutive quarter of substantial apartment absorption, taking demand for the year-ending March to a decade high of nearly 6,800 units.

With demand well surpassing completions during recent months, occupancy in Orange County's apartment base has recovered by nearly 2 full percentage points from the bottom reading seen in the middle of 2009. However, at 94.4 percent, March 2010 occupancy still was roughly 2 points under the metro's long-term historical norm.

The bump in occupancy seen during early 2010 was enough to get rents basically stabilized. In MPF Research's same-store sample, effective rents as of March exactly matched the rates seen three months earlier. Effective pricing still was down on an annual basis, off by 3.8 percent, but that loss sure looked a lot better than the annual decline that earlier had gotten as deep as about 8 percent.