Following Spike from Tubbs Fire, Santa Rosa Performance Softens

After the Tubbs wildfire leveled an estimated 5,600 structures in and around Santa Rosa in October 2017, apartment occupancy and rents surged as many displaced residents turned to temporary rentals. Santa Rosa’s apartment occupancy grew 140 basis points (bps) in October and again in November, reaching an all-time high of 98.6% in November 2017. After that, occupancy started fading again, softening to just 94.9% by January 2019. Meanwhile, rent growth also soared following the fire. From October to November, annual rent growth climbed 280 bps to stand at 7.3%. After peaking at 9.3% in March 2018, rent growth decelerated, finally turning into price cuts in December. Losses were still occurring in January 2019, when operators cut rents by 2.2%. This was the worst year-over-year rent change performance among the 150 largest U.S. markets in January. Demand, though not as high as 2012 levels, peaked in late 2017 and early 2018 before absorption turned negative in the tail end of 2018. The slowdown reflects a normalization following the performance surge after Tubbs.