to finish with an average occupancy below 93 % since June of 2021 .
Average Effective Rent and Lease Concessions
Despite a substantially changed situation from a year ago , rent growth momentum persisted through the first half of the year . An average effective rent gain of almost 6 % for new leases was slightly below last year ’ s mark but was well above any other recent year . The average unit closed June leasing for just over $ 1,250 per month after the same average stood at just $ 1,015 24 months ago .
Similarly , lease concession availability has not changed trajectory since last year . After a 15 % decline in the first six months of 2022 , only about 15 % of conventional properties were offering a discount for new leases by the end of June . This is by far the lowest availability for this point in the calendar of the last five years .
One minor change has been a small uptick in the average concession package value . This average is calculated from among only those properties offering a discount for new leases and closed the period at two weeks off an annual lease after a 5 % increase so far this year . This is an indication that for those properties that are relying on lease concessions , there has been a need to lean more heavily on that tool in recent months .
Takeaways
The rent growth of the last 12 months combined with other inflation throughout the economy and the phasing out of various pandemic response programs have combined to change the financial outlook for many renter households . Some markets have been affected more than others , but with net absorption in negative territory for the year , San Antonio finds itself in a group of markets that have been especially affected .
Rent growth has not caught up to this new reality . This is likely partially due to average occupancy remaining higher than normal after last year ’ s run up as well as lease renewals with an unusually high gap to make up after the rent gains of the last year . As already mentioned , average occupancy is quickly approaching a more typical level thanks to flagging demand , and anecdotally at least , it seems lease renewal rates have begun to face some pressure of their own .
Without much reason to expect inflation to materially lessen this year , and with some early signs of potential labor market softening , rent growth is almost certain to moderate in the coming months .
The Greater San Antonio market is exhibiting some of the impact of shifting realities within the multifamily sector and in the broader economy .
www . saaaonline . org | AUGUST 2022 23