The annual effective rent growth rate for apartments in Nashville is holding its own while, on a national scale, rates are at the lowest level in the past 31 months.
Axiometrics Inc., a provider of apartment data and research, reported this week that Nashville rents in March are growing at a 4.7 percent, the same rate as in March 2012. Nashville ranked 18th out of 100 metro rental markets in the survey. Nationally, the annual effective rental growth is 3.2 percent compared to 4.1 percent at this point a year ago.
While nationally, the effective rent growth is weaker than it has been in recent months, the occupancy rate continues to strengthen and has reached a national average of 94.4 percent. Thirty-eight of the top 88 metropolitan statistical areas are generating occupancy rates above 95 percent.
Nashville’s current occupancy rate, according to the survey, is 95.4 percent. Revenue growth locally dipped half a percentage point from 5.6 percent last year to 5.1 percent. Nationally, revenue was down a full percentage point, dipping to 3.5 percent from 4.5 percent last year.
By this time next year, when Axiometrics issues the 2014 survey, there will be hundreds of new apartment units online in Middle Tennessee. It remains to be seen how the current apartment boom will impact rental growth and occupancy rates.
The already-struggling shares of Noranda Aluminum Holding were being crushed Monday after a Citi analyst cut his rating and price target on the stock and investors took down most things related to commodities on fears that global growth is again slowing. Citi analyst Brian Yu lowered his opinion of Noranda to 'neutral' from 'buy' and now has a price target of $4.50, down from $7. At about 2:20 p.m., Noranda shares (Ticker: NOR) were off more than 8 percent to about $3.60.
On a related note, Delek US Holdings (Ticker: DK) were down 7 percent as investors also sold off oil refiners, many of which have run up big time so far this year.
Louisiana-Pacific shares also were giving up a significant ground Monday after a National Association of Home Builders/Wells Fargo index showed that home builders' optimism fell this month to its lowest level since October. In addition to complaints about material costs and getting the loans they need to build, builders are now showing some concern about consumer demand, the report said. That stung LP (Ticker: LPX) to the tune of almost 9 percent on volume that will more than triple the stock's daily average.
There's no sign of weakness yet in local home prices, according to research firm CoreLogic. In fact, we may be getting slightly frothy for a market that supposedly doesn't see the extremes of cities such as Miami or Vegas. February prices of non-distressed properties clocked in 9.2 percent higher than the mark of the year before, up from 6.3 percent in January. Throw in distressed homes and the increase was 'only' 7 percent. The national numbers are equally impressive.
Kathryn Thompson of locally based Thompson Research Group was a guest Monday on the Bloomberg Surveillance radio show where she discussed trends affecting the construction sector. Some of the big ones, she said, are the pricing power building products manufacturers now have — something Louisiana-Pacific has benefited from — and emerging signs of shortages both in materials and labor. But the market isn't overcooking like 2006, she added, in part because of greater regulation and the reach of the booming energy sector into other parts of the economy.
Thompson, whose team is headquartered in the 2525 West End Building, also spoke about the Nashville market for a bit and answered one of the big cocktail party questions of the moment. The apartment building boom the area has seen in recent years will end in the next 18 months or so.
"We're in a cycle and I think that we're 50 to 60 percent or more through that cycle," she said. "That will taper off, particularly as home prices continue to march up."
Research firm CoreLogic says the number of Nashville-area homeowners delinquent on their mortgages fell below 4.5 percent in January, the first time since June 2009 they were that low. The region's foreclosure rate held steady in the first month of the new year.
Middle Tennessee home sales have rebounded nicely and prices have started to rise at a decent clip, but there's one housing market statistic that hasn't budged much at all in the past year and change. At the end of 2012, CoreLogic says 13.4 percent of local homes with a mortgage were worth less than that mortgage. That was actually up slightly from September of 2011. Another 6.6 percent of mortgaged homes were in near-negative equity, which is about a point better than 15 months prior.
Here's CoreLogic's national release, which shows a number of cities with negative equity ratios still well above 30 percent.