Wellington, FL Rents to Grow as Community Expands

Wellington, FL has seen tremendous growth in the past 50+ years. In 1960, the population was 4,622 and the estimated population in 2015 was 62,560. This population growth includes families with children under the age of 18, with children making up over a quarter of the population in 2010.

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Map of the Wellington, FL apartment rental market area.

Aside from the availability of housing and good schools, Wellington looks to see strong job growth in the coming future. Currently they are seeing job growth at 3.94%, but that should jump up to 43.7% over the next ten years.

It has been reported that heavy investment in the South Florida area is helping to drive demand for apartment complexes. This point is further highlighted in an article explaining the recent sale of the Solara at Wellington Apartments:

More than $1.2 billion was spent on the acquisition of apartment complexes throughout the tri-county area during 2015, with demand being driven by the belief that rental rates will continue seeing steady growth.

For many younger residents in South Florida, the lack of affordable homes to purchase has kept them in the apartment rental market. As population growth continues to a steady clip here, demand for rental housing will increase. As demand goes up, rental prices should continue to increase on existing apartment rental units in the area.

wellington-fl-apartment-rent-trendsIn the case of Wellington, more developments should continue to take place with the presence of good schools and cheaper land due to its inland location. The presence of increased demand can be seen in the increased rents for apartments within Wellington. In the chart showing apartment rental trends in Wellington, rental rates have gone up year over year. Higher end rates should be noted in particular because of their dramatic spike starting in July of 2015.

 

Using RentHub.com as a resource, you can also see what the apartment rental market summary is for the past 60 days in Wellington.wellington-fl-average-apartment-rents

 

Is the DC Apartment Market Fizzling?

Among apartment industry insiders, it is hardly a secret that Washington DC has been among the most impermeable markets since the housing bubble burst.  Considering that it’s home to the most recession-proof business on the planet (the Federal Government) and steadily teeming with young, diverse talent, this shouldn’t come as much of a surprise.  Beyond heavy demand for existing apartment stock, this market has seen a crazy new construction boom.  While the City Center project has received much of the national acclaim, there are several, several other new construction projects under development.  (see here).

Basic economics should help us conclude that these factors (resilient local economy, new construction, etc.) would lead to steadily increasing rents.  Put differently, stable demand and limited supply (hence the new construction) begets increased pricing pressure.  Despite this dynamic, however, recent reports have indicated the opposite effect.  As a matter of fact, one major report indicated that rents on class A (nicest with amenities) and B properties have actually decreased by a whopping 8% over the past year.  To dig deeper into these theories and substantiate some of these reports, we looked to our platform for some answers.

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Increased Median Price Per Feet

This is a screenshot from our Competitive Intelligence product, which shows an exponentially smoothed time series of the median price per square foot of all DC apartment listings we could get our hands on in this timeframe (extensively filtered, of course).

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According to this trend graph, rents have increased by 9% on a square foot basis from July of last year until now, moving from $2.43/ft to $2.65/ft.  So, it is safe to conclude that rents definitely have not gone down in DC, despite what some reports have suggested.

A Deeper Dive

But while the city-wide data is helpful to see some macro trends, anyone that tracks real estate knows that metro-wide reports can be misleading.  This is because such “broad-stroke” analysis can jumble together apartments of different types, classes, and locations, thus leading to bias.   After all, like politics, real estate is inherently local, isn’t it?

To try to eliminate some of this potential bias, let’s see these rent price trends on a more local level.  To help visualize this information on a more granular level, our Chief Data Scientist put together a heatmap showing rent price movements on a census tract level.  For how he was able to put this together, see here.

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Non-Uniform Rent Growth

Well these movements are rather interesting, aren’t they?  According to the legend on the right, blue shows positive change, while red shows negative change, with the darker colors indicating the gravest changes.  From this map, we can start to see that the growth in rents has not been uniform and has in fact been fairly disparate depending on the neighborhood (census tract).

Top Neighborhoods for Year on Year Growth

So where has the growth been the strongest?  From the map, certain neighborhoods like Woodley Park, the Columbia Heights/U Street area, Capitol Hill, and the Brentwood/Catholic University area jump right out.  Each of these neighborhoods had rent per square foot growth of somewhere between 27% and 30% in the past year.

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So Why the Growth Disparity among Neighborhoods?

So what gives?  Why have certain neighborhoods seen such tremendous rent growth, while others have not?  Well, to answer this question we only need to revisit the first paragraph of this post – new construction.  “Cranes are the most obvious signs of economic activity in the District today,” according to a recent WaPo article.  In 2011, developers broke ground on nearly 15,000 new residential units.  Late 2012 saw another 6000 units come live, which dwarfs the 2500 that New York City saw.

Increased Listing Volume

We have noticed this trend internally as well.  From last year to this year, we have seen 25% more listings come through our platform, which has to be a direct result of the new construction boom.

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Construction Hotbeds

What do these four neighborhoods (and others as well) have in common?  They’re all hotbeds for new construction activity.  While we’re not DC locals, it seems that some of these projects have gone live recently, thereby positively affecting rent prices.

More to Come in Future Posts

There were so many interesting insights from all of this data that we couldn’t fit them all into one post.  Stay tuned for more DC market analysis.