>Average rents, meanwhile, increased by 4.1% to $1,248 in the first quarter from a year earlier, compared with the 2015 first quarter’s 5% increase, according to Axiometrics Inc., an apartment research company.

So rents increased 4.1% instead of 5% as they did a year ago. Both of these numbers are higher than the rate of inflation [0]. So rents are still rising in real terms.

Can we really say the market is "cooling", then? I would think that the "heat" of a market would be measured by the first derivative of price, rather than the second.

[0]: http://www.marketwatch.com/story/us-inflation-rate-in-past-1...

The market could be "cooling" while still "hot".

Sure, but in the article (and your metaphor as I understand it), "heating" and "cooling" refer to the rate of change of the rate of change, i.e. whether the year-on-year increase in rental price is increasing or decreasing. "Hot" (and presumably "cold") would then refer to the YOY increase itself.

I'm wondering whether the clearer metaphor isn't to use "heating" and "cooling" to refer to positive/negative YOY increases, respectively, and "hot" and "cold" to describe the average prices.

I guess "Market still heating up, just not as fast" makes for a less compelling headline.

My rent in Palo Alto fell 5% on my last renewal, and my apartment complex is letting me renew for 3 months at the 12 month price. Yes, Palo Alto's market is usually a lot hotter than the nation as a whole, but yes, it's currently following the average.

Almost the same at my rental in Oakland. My landlord has put me on a month to month lease at the same price as my twelve month lease. I'm pretty sure that new renters in my building are probably paying less rent than me.

What is the reason they are doing the month to month. Did you ask for it? This is super useful due to the fleeting nature of employment.

A landlord (or tenant) on month-to-month schedule can provide a 30-day notice to vacate, while those in 12+ month leases must provide a 60-day notice. So it's partially about increasing landlord's flexibility (which might or might not involve raising the rent or kicking the tenant out in case prices go up), and partially about what the market will accept - it seems that everybody else is doing 12-month leases and switching MTM afterwards.

(Landlord here). From my perspective for a residential tenant a shorter lease is typically better. Mainly because you aren't going to want to spend money on legal action so with the tenant tying the property up you have less flexibility (note most of my tenants are commercials and credit worthy so it's the opposite).

They just gave it to me. I've had this happen before when I lived in lower demand areas (also it was during the recession), so I don't think it's that unusual.

Come Fall and the rent would increase again due to incoming students in Cal. Have seen that in Berkeley a lot.

m-to-m at the same rate after 12 months is a standard thing in areas where it isn't a seller's market.

I've had luck tracking the overall market by setting up a craigslist rss feed, matching my complex and a nearby complex.

Exactly. But this is coming off a series of rent increases I've encountered, including one for $500 more per month (needless to say I found different housing).

A lot of dumb money is funneled into apartment complexes, there has probably been a lot of overbuilding.

Right now there are probably a dozen 200 unit+ complexes going up -- I live in a lower population region (say 250k people), and there's no way the market can absorb that many fancy apartments.

I've also noticed in my area that condo conversions have dried up.

Are you talking about Jersey City?

It costs an insane amount to rent an apartment in a good neighborhood in most big cities now in the country. San Fran is so expensive folks are leaving. No surprise that things are leveling out!

The article is talking about prices and vacancy leveling out due to developers building more units.

This is the market functioning the way it should be. Nowhere does the article attribute the leveling out to people leaving the city.

In fact, the more people are moving to SF than moving out [1].

[1]http://sfist.com/2016/03/25/san_francisco_metro_area_populat...

Want to know how much a 1br in SOMA / south beach is going for today? $3815 (mean of 292 listings)[0]. Three years ago, I was paying $500 less than that for a 2br new high end unit in the same neighborhood. Fucking ridiculous.

I'm considering moving to NYC for the lower cost of living. 1br in Brooklyn is $2220 (mean of 523 listings, excluding fees)[0].

Really happy to see people finally let the market do it's thing and produce a product (in this case housing) that's in such desperate demand.

[0]: https://github.com/brbsix/craigslist-rental-market

You need to divide Brooklyn into the parts you'd actually want to live in (commute times and safety). Split it in half. You'll definitely pay more than $2200 in the more convenient safer areas

To what extent is there a "U.S." apartment market?

Honest question.

I'm not an expert in this area but I suspect there is more of a US apartment market than you think.

Of course specific cities are going to show deviations from the national trend. Take a look at the Case-Shiller index[0]. You can add comparisons between the national index and major city indexes.

There is probably strong spatial autocorrelation (Minneapolis and St. Paul are more similar than Minneapolis and Atlanta) but cities that share characteristics (e.g. population size, density, etc.) would also share similar trends.

[0] http://us.spindices.com/indices/real-estate/sp-case-shiller-...

Ooh, that's a really fun visualization.

Looks like Detroit has actually been on the rebound since 2012, though still below original levels. Denver and Dallas are really taking off. You can really see the housing crash hammering Phoenix and Vegas.

My quick take is that there are some big trends that are correlated nationally, but they'll be more or less pronounced region by region, and some cities have their own special issues.

I'm not sure what your question is. There are millions of apartments in the US. How would there not be a market?

Sorry, to be clear: I mean, is there a single market that's useful to track collectively, as opposed to just narrowing in on individual cities?

It seems like the apartment markets in Detroit, San Francisco, and Eudora are all going to be very different, hinging on radically different factors.

Some US economic trends will affect all three, sure, but... my instinct is that they won't resemble each other very much at all. Apartments that are hundreds or thousands of miles away aren't exactly fungible commodities.

I don't know much about this area though, so it was an honest question, maybe they're all more linked than I realized.

Of course every local market is distinct from every other, but there are some national factors that affect price in every local market. For example, mortgage interest rates are generally agnostic to location. Landlords pay a mortgage to buy the properties they rent, so the "price" of the mortgage (the interest rate + down payment) will affect the price of rent.

If the US national average for interest rates drops from 5% to 4%, you would expect to see downward pressure on rental prices across all markets. Sure, not every landlord is refinancing or getting a new mortgage, but as long as some contingent of landlords is able to undercut the going rate of rentals, they will exert downward pressure on the rental price in their local market.

I'm not disagreeing with your statement, but "mortgage interest rates are generally agnostic to location" isn't fully true. 'Risk of default' and 'ease of finding a new buyer after a default' are factors in determining the rent one pays on a mortgage, and lenders may use location as a factor in assessing those.

For example, if a bank has to repossess a house in the valley, it will not have much problems finding a new buyer. For a house in Detroit, that likely is different.

That likely doesn't have much effect on deltas in the short term, though, as those factors are relatively stable.

What I assume parent was asking was whether it is meaningful to talk about aggregate apartment demand across the US as a whole. While it may be a useful number for some purposes, it's not necessarily very meaningful for discussing vacancy rates and pricing in a given location.

There are real estate investment trusts (REITs, https://en.wikipedia.org/wiki/Real_estate_investment_trust#U...) that have exposure to more than just one location....

Also many PE firms have been investing heavily ($B) in rentals via "buy to rent" loans or "bridge loans." So there is definitely a lot of institutional money flowing into the rental market.

My gut feeling is that this is just following simple demographics.

Children of the baby boomers are starting to get into child rearing age and so apts are becoming far less desirable for a myriad of child rearing related reasons.

So single family detached homes are becoming the new fad, as the boomer's children want to raise their children like they were raised and no longer want an urban apt close to the all the bars/nightlife/restaurants.

Also read: bars, nightclubs closing becoming a trend?

Everything seems to follow the development of the 1985 baby boom but nobody actually acknowledges or realizes it.

Just anecdotal but I've heard from 5-6 friends and friend-of-friends that rental prices have fallen in SF, at least in some areas. IIRC one was offered a larger place and a small reduction.

No idea if this is true but one can hope.

Update: the law of supply and demand continues to be a law.

> the law of supply and demand continues to be a law

There's no such thing as "the law of supply and demand", there's the law of supply[1] and the law of demand[2]. These laws contribute to the supply and demand model[3], but you won't find "the law of supply and demand" printed in any economics textbook.

[1] https://en.wikipedia.org/wiki/Law_of_supply

[2] https://en.wikipedia.org/wiki/Law_of_demand

[3] https://en.wikipedia.org/wiki/Supply_and_demand

So, tack on an "S" and you're good! The laws of supply and demand.

It's a bit surprising that we managed to actually find some more capacity in certain areas.