Camden expects further rent increases
A tight housing market, a soaring demand for apartments and rising rents helped revenues spike for a Houstonbased apartment rental company in the second quarter.
Camden, which has more than 58,400 rental units across its national portfolio, saw rents rise by an average 15.3 percent in the second quarter. In Houston, the average rent across Camden’s 26 apartment communities is $1,570 — 8.65 percent higher than last year, according to earlier earnings results.
Although last year’s torrid pace of rent growth is showing signs of slowing nationally, the apartment developer still expects rents to climb as demand remains elevated thanks to a housing shortage and rising home prices and mortgage rates forcing many people to continue renting. The portion of tenants moving out to purchase a new home fell to about 15.1 percent from 17.7 percent during the same period last year across Camden’s portfolio.
“The year-over-year decline in move-outs to purchase a home is not surprising. Since last year, home mortgage rates have nearly doubled, and the median existing home sale prices is now above $400,000. So, despite the recent increases in rental rates, many would-be home buyers will likely remain renters,” Keith Oden, president at Camden Property Trust, told investors in a Friday earnings call.
At the same time, Oden acknowledged that the 18 to 20 percent rental rate spikes seen last year at some of its properties across the U.S. likely won’t occur again this year, calling that level of rental growth unsustainable.
In places like Phoenix, median apartment rents are up 12.5 percent, and in Los Angeles, apartment rents are up 11.3 percent year-over-year across the entire market, not just Camden properties, according to data from ApartmentList.com. That compares to Houston, where median rents for a two-bedroom apartment are up 8 percent to $1,298, according ApartmentList.
The comparatively slower rental growth in Houston last year and expected gains in energy employment, Oden said, could mean there’s more room to raise rents here than elsewhere during the remainder of 2022.
Camden’s portfolio is also more concentrated in the Sun Belt region, where landlords of all housing types have enjoyed steady demand from an ongoing migration-related population growth. That could keep rent growth strong even if it slows more elsewhere.
Although consumers are feeling the pinch of rising interest rates and inflation — which is at a four-decade high — Camden executives said its middle- to upper-middle-class renters are more likely to weather a looming recession.
“Our consumers are doing really well. They all have jobs and when you look at the yearover-year increase in income for Camden residents, it’s gone up over 10 percent,” Camden CEO Ric Campo said in the earnings call. “Wall Street and financial folks worry about interest rates and inflation, and that’s important and I think consumers are worried about that too, but they also are doing pretty darn good when it comes to income growth and savings rates.”
Overall revenues for Camden Property Trust rose nearly 31 percent year-over-year to $361.7 million in the second quarter, according to its earnings results released this week. Profits soared to $497.3 million — up from just $30.1 million the same time last year.