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Camden Property Trust (CPT 0.54%)
Q4 2021 Earnings Call
Feb 04, 2022, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Kim Callahan

Good morning, and welcome to Camden Property Trust fourth quarter 2021 earnings conference call. I'm Kim Callahan, senior vice president of investor relations. Joining me today are Ric Campo, Camden's chairman and chief executive officer; Keith Oden, executive vice chairman and president; and Alex Jessett, chief financial officer. If you haven't logged in yet, you can do so now through the Investors section of our website at camdenliving.com.

[Operator instructions] And please note, this event is being recorded. Today's webcast will be available for replay this afternoon, and we are happy to share copies of our slides upon request. Before we begin our prepared remarks, I would like to advise everyone that we will be making forward-looking statements based on our current expectations and beliefs. These statements are not guarantees of future performance and involve risks and uncertainties and that could cause actual results to differ materially from expectations.

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Further information about these risks can be found in our filings with the SEC, and we encourage you to review them. Any forward-looking statements made on today's call represent management's current opinions, and the company assumes no obligation to update or supplement these statements because of subsequent events. As a reminder, Camden's complete fourth quarter 2021 earnings release is available in the Investors section of our website at camdenliving.com, and it includes reconciliations to non-GAAP financial measures, which will be discussed on this call. We hope to complete our call within one hour.

[Operator instructions] At this time, I'll turn the call over to Ric Campo.

Ric Campo -- Chairman and Chief Executive Officer

Good morning. The opening ceremony for the 2022 Winter Olympics are today. And as you could tell from our on-hold music and slide show, team Camden has embraced the Olympic Spirit. The Olympic theme set me down memory lane and into Camden's archive for the video I'm going to show you today.

During the 2012 Summer Olympics, the U.S. women's swim team made a video using a very popular song titled Call Me Maybe. At Camden, we are proud to be a friendly and welcoming workplace. One unique way we showed this is by greeting teammates with a hug instead of a handshake.

Camden employees probably give and receive more hugs per day than any other workplace in America. So if you combine our hugging culture with the Olympic spirit, a Call Me Maybe video becomes a Hug Me Maybe video. And following the 2012 Olympics this happened at our corporate office.[Commercial break]

One of the many adjustments in Camden's world caused by social distancing during the pandemic was replacing actual hugs with virtual hubs. Since Camden is a fully vaccinated workplace, we have recently seen an uptick in breakthrough cases of actual hugging in our workplace. We all look forward to the day when all virtual hubs at Camden will become actual hubs. 2021 turned out to be a remarkable year, and we clearly exceeded our original guidance that we provided at this time last year.

Our 2021 budget call for FFO of $5 per share, with same property revenues up slightly and net operating income down approximately 1%. As reported last night, we closed 2021 with FFO of $5.39 per share and same-property growth of 4.3% and 4.8% for revenues and net operating income, respectively. We expect 2022 to be our best year on record for earnings and same-property growth. The midpoint of our 2022 guidance calls for FFO per share of $6.24, with same-property revenue growth of 8.75% and net operating income growth of 12%.

Our geographically and product diverse portfolio in the Sunbelt markets continue to outperform. I want to thank each of our Camden team members for their hard work and commitment to our values and for improving the lives of our team members and our customers one experience at a time. 2021 was a great year, but the best is yet to come. Thank you, and I will now turn the call over to Keith Oden.

Keith Oden -- Executive Vice Chairman and President

Thanks, Ric. We have a tradition of assigning letter grades to forecast conditions in our markets at the beginning of every year. I'll start with a review of the supply and demand conditions we expect to encounter in Camden's markets during 2022 and ranked the markets in the order of best to worst. For the first time in 10 years, Camden's overall portfolio earned an A with a stable outlook and no market received a grade below A.

In addition, we are now providing this report card to you as part of our earnings call slide deck which is showing now and will be posted on our website after today's call. We anticipate overall same-property revenue growth this year in the range of 7.75% to 9.5% for our entire portfolio, with most of our markets falling within that range. The outliers on the positive side would be Phoenix and our Florida markets, which should produce double-digit revenue growth than Houston and D.C., which will likely lag the overall portfolio average but still show significant improvement versus 2021. Our outlook for supply and demand in 2022 is based on multiple third-party economic forecasts that generally reflects strong job growth in Camden's markets, coupled with a steady amount of new supply.

Estimates range from 1 million to 1.2 million new jobs created in our 15 major markets in 2022, along with 150,000 to 200,000 new completions. So our outlook reflects somewhere around the midpoint of both projections. It is likely no surprise that for 2022, our top ranking once again goes to Phoenix, which has averaged 7% revenue growth over the past three years and has an expected revenue growth well above 10% this year. We give this market an A+ rating with a stable outlook.

Supply and demand metrics for 2022 look well balanced with estimates calling for 80,000 new jobs in Phoenix and 18,000 new units coming online this year. Up next are our three Florida markets: Southeast Florida, Tampa, and Orlando. Each also earned A+ ratings with stable outlooks. These three markets should achieve revenue growth of over 10% in 2022 and are projected to have strong job growth to offset new supply coming online.

Current estimates for job growth were approximately 50,000 in both Southeast Florida and Tampa and 60,000 in Orlando. Completions are expected to be 10,000, 6,000 and 9,000 units, respectively. Our next 8 markets all earned an A rating with a stable outlook and should produce revenue growth generally within our guidance range of 3.75 to 9.75 in 2022. Atlanta, Austin, and Raleigh should achieve revenue growth toward the high end of our guidance range in 2022.

In Atlanta, job growth is expected to be 90,000 with around 10,000 new apartment completions. In Austin, projections call for 50,000 additional jobs with completions of roughly 18,000 units. And in Raleigh, the jobs to completions ratio should be five times with 35,000 new jobs versus 7,000 new apartment completions San Diego, Inland Empire, and Charlotte are next falling around the middle of the pack in Camden's portfolio. For the San Diego Inland Empire market, we expect to see over 100,000 new jobs in 2022 and with new supply around 8,000 units.

Charlotte should also deliver 8,000 units with 40,000 new jobs created, providing a good balance of supply and demand in that market. Nashville is Camden's newest market as we acquired two communities there last summer. While Nashville will not be included in our 2022 same-property pool, we would rate the city as an A with a stable outlook. There has been a significant amount of construction in Nashville, and that will continue in 2022, with approximately 10,000 new units expected to deliver this year.

However, demand for apartment homes has remained strong in Nashville with positive end migration trends and projections for over 40,000 new jobs. Dallas and Denver are both solid markets, and we expect market conditions to be favorable again in 2022. Supply demand ratios in Dallas and Denver remained steady with 95,000 and 55,000 new jobs anticipated, respectively, during 2022, with supply at 15,000 and 10,000 new units, respectively, scheduled for delivery this year. L.A., Orange County in Houston are the last two markets earning an A rating, but both have improving outlooks.

Our portfolio in LA County saw higher delinquencies and bad debt in 2021 than our other markets, but we are hopeful that conditions will improve in 2022 as COVID restrictions begin to ease and regulatory issues around evictions are reduced. L.A., Orange County faces healthy operating conditions with favorable supply and demand metrics. Job growth should be around 150,000 with completions of 16,000 expected in 2022. In Houston, conditions began to improve in 2021, and after the market has struggled with many new lease-ups giving high levels of concessions.

New supply is expected to ease in 2022 to around 17,000 units and job growth should remain strong with around 75,000 new jobs expected. Our final market is D.C. Metro, which we gave an A-, but with an improving outlook. Supply remains steady with over 13,000 new units coming on this year, but job growth should be healthy as well with 80,000 new jobs expected.

Similar to L.A., Orange County, Washington, D.C. has been a challenging market given the COVID environment and the many restrictions that were put in place as a result of the pandemic. While we are optimistic that 2022 will reflect an improved operating environment there, we have budgeted low to mid-single-digit revenue growth for D.C. Metro this year.

Now a few details on our fourth quarter '21 operating results in January 2022 trends. Same-property revenue growth was 8.5% for the fourth quarter and 4.3% for full year 2021. Our top performers for the fourth quarter all had over 10% revenue growth and included Tampa, Phoenix, Southern California, Raleigh, and Southeast Florida. Rental rates for the fourth quarter had signed new leases up 16.7%, renewals up 14.1%, and a blended rate of 15.5%.

Our preliminary January results indicate similar trends with blended growth of over 15% on signed leases. February and March renewal offers were sent out with an average increase in the mid-14% range. Occupancy averaged 97.1% during the fourth quarter and compared to 97.3% last quarter and 95.5% in the fourth quarter of '20. January 2022 occupancy has averaged 97.2% compared to 95.7% in January of last year and is slightly up from our fourth quarter '21 levels.

Annual net turnover for 2021 was in line with 2020 at 41%. And move-outs to home purchases were 15.8% for the quarter and 16.4% for the full year of 2021, relatively in line with our reported 15.8% for full year 2020. I'll now turn the call over to Alex Jessett, Camden's chief financial officer.

Alex Jessett -- Chief Financial Officer

Thanks, Keith. Before I move on to our financial results and guidance, a brief update on our recent real estate activities. During the fourth quarter of 2021, we purchased Camden Greenville, a recently constructed 558 unit mid-rise community in Dallas. And we purchased five acres of land in Denver and two acres of land in Nashville for future development purposes.

For the full year of 2021, we have completed acquisitions of four communities with 1,684 apartment homes for a total cost of approximately $633 million, ahead of our original 2021 acquisition guidance of $450 million. and we acquired four undeveloped land parcels for a total cost of approximately $72 million. Additionally, during the quarter, we disposed of two operating communities in Houston, and one operating community in Laurel, Maryland for total proceeds of approximately $260 million. These three dispositions were on average 21 years old, with average monthly rents of $1,350 per door and annual capex of approximately $2,300 per door.

Using actual capex, these dispositions were completed at a 3.9% AFFO yield, generating a 10.5% unleveraged IRR over a 20-year hold period. Based on a broker cap rate, which assumes $350 per door in capex and a 3% management fee on trailing 12-month NOI, the cap rate would have been 4.3%. And finally, during the quarter, we stabilized ahead of schedule Camden North End two, a 343 unit, $79 million new development in Phoenix, generating an approximate 8.75% yield. And we completed construction on Camden Hillcrest, an $89 million new development in San Diego.

On the financing side, during the quarter, we issued approximately $180 million of shares under our existing ATM program. Moving on to financial results. Last night, we reported funds from operations for the fourth quarter of 2021 of $160.2 million or $1.51 per share, exceeding the midpoint of our prior guidance range by $0.02 per share. This outperformance resulted primarily from higher levels of occupancy and rental rates at our non-same-store acquisition and development communities and lower taxes and utilities at our same-store communities.

For 2021, we delivered full-year same-store revenue growth of 4.3%, expense growth of 3.5%, and NOI growth of 4.8% as compared to our original 2021 same-store guidance of 0.75% for revenue, 3.5% for expenses, and negative 0.85% for NOI. You can refer to Page 27 of our fourth quarter supplemental package for details on the key assumptions driving our 2022 financial outlook. We expect our 2022 FFO per share to be in the range of $6.09 to $6.39 and with a midpoint of $6.24, representing an $0.85 per share increase from our 2021 results. This increase is anticipated to result primarily from an approximate $0.79 per share increase in FFO related to the performance of our same-store portfolio.

At the midpoint, we are expecting same-store net operating income growth of 12%, driven by revenue growth of 8.75% and expense growth of 3%. Each 1% increase in same-store NOI is approximately $0.065 per share in FFO. An approximate $0.35 per share increase in FFO related to the growth in operating income from our non-same-store joint venture and retail communities, resulting primarily from higher rental rates, lower bad debt, and the incremental contribution of our four acquisitions completed in 2021 and our nine development communities in lease-up during either 2021 and/or 2022. And an approximate $0.07 per share increase in FFO due to an assumed $600 million of pro forma acquisitions spread throughout the year at an initial yield of 3.5%.

This $1.21 cumulative increase in anticipated FFO per share is partially offset by an approximate $0.11 per share decrease in FFO from our completed 2021 dispositions, an approximate $0.04 per share decrease in FFO from an assumed $250 million of pro forma dispositions anticipated to primarily occur late 2022, an approximate $0.03 per share decrease in FFO, resulting primarily from the combination of lower interest income from lower cash balances higher franchise and margin taxes and higher corporate depreciation and amortization. Our combined general and administrative, property management, and fee and asset management expenses are anticipated to be effectively flat year over year and an approximate $0.18 per share decrease in FFO due to the additional shares outstanding for full year 2022, following our 2021 ATM activity. Our revenue growth midpoint of 8.75% is based upon an anticipated 11% average increase in new leases and a 7% average increase in renewals. We are also anticipating that occupancy will moderate slightly to 96.5%.

Page 27 of our supplemental package also details other assumptions for 2022, including the plan for $400 million to $600 million of on-balance sheet development starts spread throughout the year with approximately $315 million of annual development spend. We expect FFO per share for the first quarter of 2022 to be within the range of $1.45 to $1.49. The midpoint of $1.47, represents a $0.04 per share decrease from the fourth quarter of 2021, which is primarily the result of an approximate $0.02 per share decrease in FFO, resulting from our fourth quarter 2021 dispositions; an approximate $0.01 per share decrease in sequential same-store net operating income, resulting primarily from the reset of our annual property tax accrual on January 1 of each year and other expense increases, primarily attributable to typical seasonal trends, including the timing of on-site salary increases. And an approximate $0.01 per share decrease in FFO due to the additional shares outstanding from our fourth quarter 2021 ATM activity.

Our balance sheet remains strong, with net debt to EBITDA at 3.8 times and a total fixed charge coverage ratio at 6.4 times. As of today, we have approximately $1.4 billion of liquidity, comprised of approximately $500 million in cash and cash equivalents and no amounts outstanding under our $900 million unsecured credit facility. At quarter end, we had $199 million left to spend over the next two years under our existing development pipeline, and we have no scheduled debt maturities until late 2022. Our current excess cash is invested with various banks, earning approximately 15 basis points.

At this time, we'll open the call up to questions.

Questions & Answers:


Operator

[Operator instructions] Our first question comes from Haendel St. Juste with Mizuho. Please go ahead.

Haendel St. Juste -- Mizuho Securities -- Analyst

Hey. Good morning. Appreciate all the market color and all the detail. I had a question more so on the -- I guess we're starting to see a bit of a divergence here in the new lease rates and renewals.

The new lease rates continue to accelerate renewals slowing a bit. How do we think about that relationship near term? I expect new lease rates to come under more pressure as we face tougher comps, but I guess I'm curious also which markets are you seeing the best and weakest pricing power on renewals? What's causing the drag?

Ric Campo -- Chairman and Chief Executive Officer

Yes. So hand the gap between new leases and renewal rates is something that moves around quite a bit, primarily because of what we do on renewal rates. From time to time, depending on what's going on in our market or a submarket, we might put in place renewal caps. And which is not something we would ever do on new lease rates, not in this environment.

So it's going to move around a little bit depending on kind of what -- it's literally our pricing team, looking at the trends day to day. and making recommendations. I think in the first quarter, we had a couple of markets that we had renewal caps in place. But I mean, you're talking about renewal caps on what might have done as much as a 20-plus percent renewal rates being capped at 18%, and that would have been in someplace like Tampa, St.

Petersburg. But it's not unusual for that to move around. I would expect to see that over the course of the year, you probably will see a narrowing in that. But I think our guidance, as Alex pointed out, has new leases at 11% over the course of the year and renewals at 7%.

So not too far off of where we are right now. But it's clearly, it's absolutely part of the art and science of revenue management and -- it's just our revenue team looking at current trends and making recommendations.

Haendel St. Juste -- Mizuho Securities -- Analyst

Got it. Got it. So no particular market of note on the renewal side that you're seeing a more meaningful difference in a form?

Ric Campo -- Chairman and Chief Executive Officer

No. And I would say when we talk about less strength, I mean, I think that's the overriding message of this entire of all the data sets that we sent out last night. I mean you're talking about pretty unprecedented levels of both new lease and renewal rates across all of our markets. And we had 12 of our 14 markets with double-digit NOI growth in the fourth quarter, and that trend has continued over in the first quarter.

So somebody always has to be at the bottom. And right now, Washington, D.C. is at the bottom and some of that is just the drag from the D.C. Metro properties where we are really precluded from finding a market-clearing rate for the communities, the apartments that we have there.

But overall, these are I think the lowest grade that we gave was an A-, and that was Washington, D.C. And so this is the first time we've ever had that happen in our portfolio. Obviously, a lot of strength out there.

Haendel St. Juste -- Mizuho Securities -- Analyst

Yes. Yes. Very well noted. Actually, your comments lead me to my second question, which is, I guess, your longer-term views on your Houston and D.C.

portfolio exposures here. Both markets haven't exactly been the strongest of late, although they're they're improving, at least the outlook for this year. I guess I'm curious on your exposure to your two largest markets, you're increasing exposure to other smaller Sunbelt markets. You've sold a few assets in Houston in this past quarter.

So I guess, how do we think about your exposure there over the next few years? Are these markets become source of the funds for your expansion into some of these other smaller, higher-growth sunbelt markets?

Ric Campo -- Chairman and Chief Executive Officer

Well, Haendel, that's exactly what our strategy has been. We talked about it on the call last time, which was we were going to use this environment to sell down Houston and D.C. and then expand our portfolio and to increase the exposure in some of the markets that we're underweighted in. Ultimately, that's our strategy.

It's going to take us a few years to get there, but it makes a lot of sense. I mean clearly, geographic diversification and primarily being in the Sunbelt has definitely helped us a lot. And I think, ultimately, as we do that sort of portfolio redistribution over the next couple of years, it will help us do more geographically [Inaudible]. If you look at the last cycle in terms of how much we bought and sold, I mean, we really transformed the portfolio from 2010 through about the fourth -- to the pandemic.

And we sold on average, 26-year-old assets and redistributed that cash flow sold out in Las Vegas. So we did a lot of portfolio management then when the numbers that was really if you look at how many sales we did relative to our total asset base. In 2010, we redistributed 44% of our NOI around the country as a result of those transactions, where we sold assets, nearly $3 billion that bought properties and then we also developed properties. And so we'll continue that.

I think this environment gives us the opportunity to do it on a very, very low spread basis where we're not giving up a lot of cash flow given the amazing market that people want to buy. Those are properties they sort of -- that's kind of the hottest spot in the market right now, even though all it's very cost for sure.

Haendel St. Juste -- Mizuho Securities -- Analyst

Got it. That's helpful. Is there any pricing difference or noticing any significant demand difference in selling, say, Houston assets versus D.C. given some of the challenges you noted earlier.

Ric Campo -- Chairman and Chief Executive Officer

Early on, there was sort of a pricing differential in Houston relative to other markets and it needs to be a bit, but that has vanished because from wallet capital -- when you look at what's happened, I mean, in 2021, there was roughly 300 -- almost $350 billion in multifamily transactions. And just to put it in perspective, the gateway markets, the sales were up 8% from the prior year. And in non-gateway markets, you're up 96%. So all the non-gateway markets is where the capital went.

So for us, when we started talking -- I think last year, when we talked about the selling down and redistributing these assets talked about perhaps having the 100 to 125 basis point nerve cap rate, and that's narrowed to under 50%. The massive bid for those properties. And there is no discount today in Houston or in D.C. And I think the other part of that equation is when you think about Houston, Houston added 154,000 jobs this year.

It's going to add 75,000 jobs next year. 2022 is the year where energy companies are actually hiring, and that has to do with $90 oil. Some people are thinking that oil is going to go to over 100. But -- so the bottom line is that while Houston has not added all of its jobs back from the pre-pandemic level and all of the other cities in Texas have Houston has gas in its tank.

And it is our lower -- the Houston and D.C., while there's lower growth cities today, they still have the ability to -- they have gas in their tank because they haven't been able to we haven't pushed them as far as other cities. And then D.C., as Keith mentioned, in our district -- in the district, we have some really significant assets we cannot raise renewal rates. So you just have to renew it at the original number. And we have [Inaudible] the market there, and that's what's driving sort of DC to be at the bottom of our growth.

But even when you look at Houston number, we're -- in a normal year, I'd be cheering Houston. But the problem is you've got the markets like Tampa and Phoenix are just out of control good. And so the slowness of Houston makes you feel like it's a dragon because I mean it is on a fundamental basis, but it's still really good, well above trend for Houston. And I think we have the benefit of more growth there when other markets perhaps start slowing in the future.

Haendel St. Juste -- Mizuho Securities -- Analyst

Great. That's fantastic color. Appreciate the time and insights. Thank you.

Operator

Our next question comes from Derek Johnston with Deutsche Bank. Please go ahead.

Derek Johnston -- Deutsche Bank -- Analyst

Hi, everybody. Thank you. Can you touch on the 2022 expense environment kind of baked into guidance really in regards to taxes and payroll pressures, it generally seems to be a favorable setup. But any additional color on possible tax rate increases or expectations given that the expenses seem to remain largely in check.

Ric Campo -- Chairman and Chief Executive Officer

Yeah. Absolutely. So we are anticipating that property taxes are going to be up about 3.3% in 2022. A large component of that is some significant property tax refunds that we've already settled the cases and so it's just a matter of receiving the check.

To give you an idea, our total property tax refunds in 2021 was about $2.2 million, and we're expecting about $3.1 million of refunds in 2022. So that's one of the primary drivers of the property tax number being relatively mild at 3.3%. The other thing I'll point out is that rates in Texas, so both Houston, Austin and Dallas, rates came in much lower than we had originally expected for 2021, and I think that bodes very, very well for 2022. If you think about the -- sort of the rest of our expense categories.

We continue to do a really good job of controlling and being more efficient with our marketing spend. A lot of that is driven by the technological advancements that I've talked about in prior quarters. And we're seeing the same thing on the salary side. If you think about the technological advancements that we've talked about, including the installation of smart access for all entranceways, which not only improves the customer experience, it also provides efficiencies for our maintenance teams and then most importantly, facilitates self-guided tours.

And then we're also improving our sales process through our funnel implementation which is our sophisticated customer relationship management tool and then also marketing and automation platform. When you put all of that in place and then we're also working on AI that all helps to sort of counter some of the inflationary expense controls in 2022 and beyond. So that's really the primary driver, and that's why we feel pretty good about the 3% number.

Derek Johnston -- Deutsche Bank -- Analyst

No. That's very helpful. So yes, this quarter and last year, the land acquisitions certainly show a commitment to develop even a mid-rise n construction material labor costs. So -- are rising rents encouraging enough to further ramp development now? I mean, what yields would you expect on any new starts? Or what yields would you need to make a project to go especially when you look at apartment cap rates for acquisitions, especially the new stuff you like, are so tight down in the mid- to high threes.

What development yield kind of makes a project to go? And what's the minimum or what's the tipping point?

Ric Campo -- Chairman and Chief Executive Officer

Development deals are -- what we look at is our unlevered IRR over a seven-year period. And when you look at -- so you can talk about it from that perspective. And clearly, the good news is that rental rates have risen faster than construction costs, at least in the cycle, which is pretty amazing. Just to give you some data points, the 600-plus -- if you take the $600 million we have under construction plus the $200 million that we've already finalized, we have cap rates.

Our initial yields on stabilization have actually gone up because of the rising interest rates or the rise in rental rates to roughly 6% sort of going to yield. When we look at our pipeline that we have, which is roughly another $1 billion, $1.5 billion, something like that. Most of the sort of average that we're looking at those are going to be in the fives, low fives probably. And we haven't really updated the numbers on both cost for the rents in those pro formas.

So when you look at cap rates in the low threes and existing yields in the five, clearly, a development is a preferred option when you think about risk reward and the returns that we're making. We have pressed our development of people to try to expand the pipeline. And if you look this year, we're in a -- our midpoint of $0.5 billion to starts, which will take our pipeline back up to a little over $1 billion or at least our construction progress up to $1 billion. It's a really good business right now.

And one of the challenges, obviously, is the forward-looking start numbers and those are also peaking. So we're long-term holders, obviously. So we can work through those cycles. And I think hard -- if you ask me, could we double our pipeline and go from $1 billion to $2 billion, really hard to do.

And just to give you timing and just what it takes to get a development done. But we're we usually do $300 million a year, and we'll do $500 million this year and hopefully, maybe something like that next year. So at the margins, we're comfortable in that $1 billion, $1.2 billion, $1.3 billion range.

Derek Johnston -- Deutsche Bank -- Analyst

Thank you.

Operator

Our next question comes from Nick Joseph with Citi. Please go ahead.

Nick Joseph -- Citi -- Analyst

Thanks. What's the current loss to lease for the portfolio? And then for the increase assumed on new leases, how does that look in the first half of the year versus your expectations in the back half of the year?

Alex Jessett -- Chief Financial Officer

Yeah. So if you look at current loss to lease and there's -- as we've talked about in the past, because of dynamic pricing, there's lots of different ways you can sort of slice this number. If you look at all of the new leases that we signed in December and you compare those to the effective leases in place, that would put loss to lease sort of in the 10% to 11% range right now. So that's sort of where we are.

If you think about the way we are anticipating 2022 to sort of roll out, we're anticipating continued very strong numbers, and obviously, in the first quarter and then second quarter and third quarter, we get into sort of our peak periods. But we are expecting seasonality to start kicking in toward the latter part of the third quarter and the fourth quarter. So you'd start to see a lot of that coming back down.

Nick Joseph -- Citi -- Analyst

Thanks. And then just on rental assistance, I think you had $5.3 million in the third quarter. What was that number in the fourth quarter? And then what is assumed in 2022 guidance?

Alex Jessett -- Chief Financial Officer

Yes. Absolutely. So the $5.3 million in the third quarter, that was a total. On a same-store basis, for the third quarter, it was $4.2 million.

that did increase to $5.1 million in the fourth quarter of '21. So that gave us, for a same-store basis, about $12.5 million for 2021. And what we've got in our assumptions today is that we're going to recognize about half of that amount in 2022.

Nick Joseph -- Citi -- Analyst

Thank you very much.

Operator

Our next question comes from Brad Heffern with RBC. Please go ahead.

Brad Heffern -- RBC Capital Markets --- Analyst

Hey, everyone. Alex, just as a follow-on to that last question about new lease growth. You have the 15% plus number in January, and it seems like you can probably sustain double digits through the second quarter before the comps get really tough. But just to hit the averages that you talk about, it seems like it will be some sort of low mid-single-digit number in the second half of the year to hit the averages.

So is that the right way to think about it? And is that kind of what we should think about as your expectation for market rent growth from where we are right now?

Ric Campo -- Chairman and Chief Executive Officer

Yes. Absolutely. I think that's probably a pretty good way of thinking about it. If you sort of look at December of 2021 to December 2022 and what do we think market rent growth is going to be over that period, we think it's sort of in the call it, the 4% to 5% range.

And then you've obviously got the loss to lease that we're going to be able to recognize partially throughout the rest of the year.

Brad Heffern -- RBC Capital Markets --- Analyst

OK. Got it. And then on the balance sheet, obviously, this quarter, you ticked below the bottom end of your typical four to five times range. I'm curious for funding needs beyond the dispositions in '22.

Should we expect that those will come from debt? Or do you have a desire to keep the balance sheet maybe cleaner than it would normally be just given the place in the cycle?

Ric Campo -- Chairman and Chief Executive Officer

Well, we've always have a stated view that we should have our debt-to-EBITDA in the 4% to 5% range. We're obviously below that as a result of the equity issuance, but we also have a net acquisitions or net-net investment when we take acquisitions minus dispositions plus development spend. So we -- we'll be executing all that, and we'll get that to EBITDA back into the middle part of the equation. But today, it's an interesting time when you look at the ability to put permanent capital on the books with -- and then deploy that capital into what's a very frothy acquisition market, but I've never seen our AFFO yield under 3% on our stock price generally in my business career.

So I think we have a green light to use every source of capital, and we will continue to be in that band. And when it's opportunistic for us to issue equity, we will, when it's opportunistic to issue debt. We will, but we'll stay in that band in general.

Brad Heffern -- RBC Capital Markets --- Analyst

Great. Thank you.

Operator

Our next question comes from Neil Malkin with Capital One Securities. Please go ahead.

Neil Malkin -- Capital One Securities -- Analyst

Hey. Thanks. Good morning, everyone. First question, a little bit bigger picture.

So you guys have a unique insight into sort of the divergence between Sunbelt and Coastal to some extent, you have the DC and then obviously Southern California. And I'm wondering, I've heard kind of mixed things between people have elevated coastal exposure kind of being incrementally positive and seeing people return to the office or whenever that happens, maybe in 2025 expecting solid growth and sort of almost like a return to normal in a California market kind of like a pre-COVID type of thing. But at the same time, you're seeing amazing historic levels of in-migration to your Sunbelt markets and just very strong growth as evidenced by where you are relative to recover rent levels. So I'm just wondering if you can kind of give your view on over the next, call it, three years, what you see in terms of job growth, population growth migration, in the Sunbelt versus kind of what you're seeing in California? And if you just think California may be a little bit impaired just given this significant outflow of businesses and people.

Ric Campo -- Chairman and Chief Executive Officer

Yes. So we do have a little bit of a unique perspective because we've operated in coal in the Sunbelt markets for many years now. And I think -- I mean, our general Ben, that the patterns of migration from coastal markets, in particular, California, the Northeast, into the Sunbelt markets that was already in place pre-COVID, thoroughly accelerated during Tobi. And -- but our view is that when -- to when it all settles back down to a more normal pattern, you're still going to be left with the normal with the pre-COVID trends of migration to the Sunbelt or hold for reasons that really don't have anything to do with Covenant experience, although that clearly was an accelerator.

But interestingly enough, in California for 2022 based on our game plan, California is really not going to be a drag on the portfolio in 2022. So the job growth that's happening in L.A. County versus the number of new starts there. put that particular market in a really good place.

Clearly, the difference in -- and you still have -- we still have some kind of fighting the regulatory construct in California. But we do anticipate that that will improve in 2022. So I think we are going to get some relief. In D.C., our issue in D.C.

relative to the balance of the portfolio, as Rick mentioned, is more a DC proper experience for us. The metro -- there are a couple of outliers in the D.C. metro suburban markets where there's still some regulatory constructs in place, but they're minor in the overall scheme of things. So I think that both of those markets post-COVID, post regulatory constructs are still going to be going through the reset in rents that the rest of America has already -- a lot of America is already in the midst of.

I don't think they're going to get passed over in the sense of that we're going to come out of this and look back two years from now, and there was a reset that didn't include the last 10% up in both California and D.C. in the D.C. metro market. It's just going to come in a different timing.

And as Rick mentioned, mean it kind of bodes well for us as we roll through 2022 to have two of our larger markets. And then I throw Houston in that basket as well because we clearly haven't gotten -- we're not going to get the reset all at the same time as we got in our other markets in Houston. So three of our largest markets that are kind of going through the reset in a different phase than the others. But in our view fundamentally hasn't changed about the investment thesis for why we're in California and why we're where we are in California, which is primarily Southern, which is exclusively Southern California and the D.C.

metro market, I think, is due for a nice recovery post-COVID.

Neil Malkin -- Capital One Securities -- Analyst

I appreciate the color. And then maybe just again on just thinking about the acquisition side. I mean, obviously, putting a lot of capital to work. And that's great.

I'm just curious to see if your underwriting standards have changed, your unlevered IRR targets have changed. I understand that your cost of capital is at historic levels. But it's just buying at a three cap and you're kind of uncertain about what the terminal or exit cap rate would be. And -- so just when you're having those internal discussions, I mean, has anything changed? Or have you gotten more bullish on your like sort of year one through three rent growth assumptions that make you comfortable going in at a low to mid-three cap.

And -- yes. So if you could just maybe expound upon that. And if you'd use debt more so to get an even higher positive leverage this year?

Ric Campo -- Chairman and Chief Executive Officer

Well, I think the -- clearly, our cost of capital has gone down, and we do adjust our current rates based on our cost of capital. And it's just a simple model, right? It's equity, your equity cost plus your debt cost and the weighted average cost of capital and you compare that to your unlevered IRR. So a couple of points, one being the edge cap rate, and that's always a very tricky number, right, which is what do you use and that can be all of the math. We generally try to move that up from our initial acquisition number by 25, things like that.

But that's obviously a crapshoot, what our cap rates and price is going to be in seven years, right? So -- which is our model period. In terms of going in yields, though, when we -- underwriting today, I mean, if you go in and we buy a property today in Phoenix, for example, or only using an example where we actually bought one like in Nashville. So in our original national underwriting in the two properties we bought last year, we had moderate growth, and we bought those in May, right? So we didn't have this big wave that sort of happened, and we know it's good markets. And we knew that rents were starting to move up, but we didn't think we didn't realize they're going to move up as part fast as they did.

So all of our acquisitions last year are outperforming by a substantial margin of what we thought that we may be doing. We put in moderate growth through 2021 and forward. And today, our underwriting is a little different because it just depends on where the rent role is, but we definitely are increasing rents at a faster pace in the first 12 months of the acquisition today. And then we start backing off of that in 2023.

And we see -- we probably -- we have better-than-average growth in 2022 for obvious reasons, better average growth in 2023. And then we start moderating it to long-term historical numbers. And we use somewhere around 3%, 3.5%, depending on where it is. And after that, the numbers were -- the numbers generally still work pretty well even when you're going at these low numbers because a low cap rate is because of the outsized growth in to get in 2022 and 2023.

So we're comfortable that we're making good spreads over our long-term weighted average cost of capital and not underwriting so much that we have to have prices go up or cash flows go up dramatically to make those numbers work.

Neil Malkin -- Capital One Securities -- Analyst

OK. Great. Thank you, guys, and nice quarter.

Ric Campo -- Chairman and Chief Executive Officer

Thanks.

Operator

Our next question comes from Alexander Goldfarb with Piper Sandler. Please go ahead.

Brad Heffern -- RBC Capital Markets --- Analyst

Hey. Good morning down there. So a few questions here. First, looking at this year and the rent growth, how much of the rent growth are you getting this year from the burn-off of free rent from last year? I'm guessing probably very few of your markets really had material free rent, but maybe D.C.

or Southern Cal. Just sort of curious how much of this year's rent growth is coming from just the expiration of free rent in last year's numbers.

Ric Campo -- Chairman and Chief Executive Officer

So we don't offer concessions. And so that's not a factor for us.

Brad Heffern -- RBC Capital Markets --- Analyst

OK. OK. So then I think it was to handheld's question or Nick's question. the 4% to 5% market rent growth that you're expecting, that's on top of the mark to market.

So basically, it's all face value on face value rent?

Ric Campo -- Chairman and Chief Executive Officer

Correct.

Brad Heffern -- RBC Capital Markets --- Analyst

OK. Cool. Second question is on markets. You guys just entered Nashville but two other markets that would seem to jump out and be natural would be Salt Lake and San Antonio.

So as you guys look on recycling capital from Houston and from D.C., how -- what's the appetite for entering additional new markets?

Ric Campo -- Chairman and Chief Executive Officer

Well, we clearly like the markets we're in. Otherwise, we'd be there. I think today, entering a new market, when we entered Nashville, we did in a pretty big way and we did it early on a relative basis the big run-up in pricing a run-up in rents and that was good. Those markets are interesting markets long term.

San Antonio has always been kind of an unusual market. We were close to it in Texas. We see it -- and we generally have kind of not done to San Antonio because of the depth of the employment market there. AT&T moved there at headquarters.

They have a couple of really good things going on. But we just kind of stayed out of San Antonio because we didn't like the patient the job market there on an ongoing basis. HultLake, we've looked out. We looked at other markets, but smaller markets like Voice and Charleston.

And we just think that our markets today are -- we've got enough to say grace over, and we have enough under-representative markets where we don't really need to get into other markets. That being said, we did enter Nashville and there's clearly -- we follow these markets and try to decide whether we're going to allocate capital there. But we have enough places to allocate capital without going to new markets right now.

Brad Heffern -- RBC Capital Markets --- Analyst

OK. Thank you.

Operator

Our next question comes from John Kim with BMO Capital Markets. Please go ahead.

John Kim -- BMO Capital Markets -- Analyst

Good morning. I wanted to follow up on your update of loss to lease, which Alex mentioned is 10% to 11% now versus 16% just a few months ago. But it's only 20% to 25% of your leases rolled in the fourth quarter, and all of those went directly to market, which I think are pretty aggressive assumptions. Shouldn't that figure be at least 12%, maybe as high as 12.8% versus the 10 to 11?

Alex Jessett -- Chief Financial Officer

Yes. And that's why I was trying to make a differentiation between if you think about the dynamic pricing, right? So our pricing is changing every single day. And if you take a sort of a snapshot at the end of the quarter, right? And you say, this is our asking price as compared to our effective rents and you're going to come up with a different number. What I was telling you is that if you actually look at the leases that we signed during the month of December and you compare those to the effective rents.

That's where you're going to come up with sort of this 10% to 11% level. So it's two different ways of looking at it. If you just look at it based upon the pure ask rents, yes, there's going to be about a 13% number, right? But as we know with dynamic pricing, there is a typical or there is a tendency, whereas pricing is sort of ticking along and then it will drop and then we sign a good amount of our leases at that little drop and then it'll go back up to look at loss to lease, I think that the sort of 10% to 11% is probably a better way to look at it in an environment like this. In a typical environment where you're sort of talking about a 3% to 4% loss of lease is not as dramatic.

But clearly, when we're here with unprecedented new lease and renewal increases, I think it's important that you look at it both ways.

John Kim -- BMO Capital Markets -- Analyst

OK. I get that. But at the same time, the market rents for your markets probably didn't see that much seasonality, I'm guessing. So I would have thought that would have been a further support from that number being higher.

Alex Jessett -- Chief Financial Officer

We certainly did see some seasonality, and you can see that if you look at the effective versus the sign. So we did see some seasonality, particularly in the month of December. But yes, so that's the math, and that's how our numbers are working out.

Ric Campo -- Chairman and Chief Executive Officer

The seasonality we had this year was interesting because usually, you're dropping rents pretty dramatically from the third -- second quarter, third quarter or what happened here is we had a slight decrease in the slight negative second derivative, but still a very robust number that you -- if you go back probably years, you wouldn't see the number they -- the amount of rental increases that we're getting in that fourth quarter and just wouldn't see it like that. Because the seasonality this year was where it was like a really slow and not dramatic at all in any major market, which is usually is usually not the case. What's happened is you just had more people coming into the market and more demand in the market, which kept occupancy is high and where we didn't have to drop rents or lower renewals during this period dramatically to keep market share and keep occupancy up. And that's just the equation where you just have a whole lot more demand for multifamily than you have supply, and it just -- it created a very, very, very light seasonality, but generally not like we normally have.

John Kim -- BMO Capital Markets -- Analyst

Right. OK. And Rick, you mentioned what development expectations are in IRRs on development starts. You had one development at 85% stabilized yields coming in this period.

What should we be modeling for the existing pipeline, just given how much rents have come up in the last 12 months?

Ric Campo -- Chairman and Chief Executive Officer

Well, the existing pipeline without remodeling it was sort of in the mid-fives, but it's probably going to be better than that. It's just one of those things where we haven't really remodeled all of our pipeline development deals at this point with new rents, but also we haven't remodeled them with new cost either. So we'll do -- I think the development yields will be higher than we would have all projected, but it's hard to tell right now. And especially when you're talking about initial occupancies and we're looking at a pipeline report right now and our initial occupancies on our pipeline are in the second quarter -- first quarter through the third quarter of two.

So for us to kind of try to model that today, and we're just not going to do that yet. So the bottom line is that the -- it looks like this development pipeline will be a pretty robust and good pipeline.

John Kim -- BMO Capital Markets -- Analyst

And was that the pipeline of communities that we haven't started. If you think about the ones that we have started, we're looking at yields north of 6% there on average. So that eight quarters that was truly a one-off, or could there be others north of 7%?

Alex Jessett -- Chief Financial Officer

We believe we have --

Ric Campo -- Chairman and Chief Executive Officer

[Inaudible] that hit over 7% in Phoenix. But most of them are in the sixes, mid-sixes to high fives some of the ones, for example, that were -- when you think about real urban properties or California properties, those were in the -- those generally tend to be in the -- when we underwrote them originally in the low fives, five-ish. And definitely, we're going to be better than that on those. But getting the outliers like the ag and the seven, hard to do that in this environment.

But given where cap rates are if you think about you're producing at 6% or 6.5% and you have a three and a quarter cap rate, I mean, you talked about some creation of value there, it's pretty amazing. The development margins are probably at the highest level I've ever seen him. And I said that probably in 2010 and '11, but these are higher today is cap rate is compressed so much.

John Kim -- BMO Capital Markets -- Analyst

Thank you.

Operator

Our next question comes from Austin Wurschmidt with KeyBanc. Please go ahead.

Austin Wurschmidt -- KeyBanc Capital Markets -- Analyst

Hey, guys. Thank you for the time here. Just curious what the rates are on your renewal leases that are going out into February and March?

Alex Jessett -- Chief Financial Officer

Mid-14s.

Austin Wurschmidt -- KeyBanc Capital Markets -- Analyst

Mid-14s? Great. Thank you. And then when you -- you talked about some of the technological advancements and the savings that you're getting in your operating expenses. Can you give us a sense what the total amount or breakdown of that is that you have left to capture over the next few years?

Alex Jessett -- Chief Financial Officer

Yes. I would tell you that we're really on the forefront of this. And ultimately, we expect the efficiencies to continue through 2022 and really take hold in 2023 and beyond. It's -- obviously, the trend that we're all moving toward is self-guided tours.

And as I said, when we rolled out our Smart Access solution, which is what you must have in order to effectively do self-guided tours. I think I think that's going to be a big driver as we go forward, especially if we can start adding wayfinding, which is going to be the sort of the next thing that we're all working toward. And then I think our virtual leasing agent, which we're in the process of building out right now, I think, is going to create some real significant efficiencies as we go forward. So really excited about where we are today, but even more excited about where we're going to be, as I said, the latter part of 2022 into 2023 and beyond.

Austin Wurschmidt -- KeyBanc Capital Markets -- Analyst

Could you quantify how big that savings potential is or NOI creation, however you guys are looking at it to give us a sense of how that could play out in the years to come.

Alex Jessett -- Chief Financial Officer

Stay tuned, and we will continue to, as we flesh this out, give you guys better information around the actual dollar amount. But I will tell you, I think we're all very well aware that we are operating in a very inflationary time frame right now, and we're coming out with expense growth of 3%. So you can start to see that we're already capturing quite a bit.

Austin Wurschmidt -- KeyBanc Capital Markets -- Analyst

All right. Got it. Thanks, Alex.

Ric Campo -- Chairman and Chief Executive Officer

We'll give more clarity on that in the next quarter call.

Operator

Our next question comes from Joshua Dennerlein with Bank of America. Please go ahead.

Joshua Dennerlein -- Bank of America Merrill Lynch -- Analyst

Yeah. Hey, guys. I guess -- I mean, could you walk us through the assumptions that get us to the low end of your guidance? I guess I was particularly focused on kind of the rate assumptions you're assuming to get there?

Alex Jessett -- Chief Financial Officer

Yes. Here's what I would tell you is probably a little bit different. If I think about the factors that could cause us to be below the midpoint One of the big ones is bad debt and is wrap, right? We talked about that we had $12 million or $12.5 million in 2021. and then we're anticipating about half of that in 2022.

Obviously, that's a very variable item, right? And that's something that we're very focused on. The other thing I'll tell you is that we took our occupancy down to 96.5% from 96.9% in 2021. And so we'll watch that very closely. And then really, the third factor is is how does the third and fourth quarter shake out? I mean, there are certainly -- obviously, we feel very, very, very good about our business.

But there are things out there that we're all watching, which are more on the macro side, and we'll have to see how that affects the third and fourth quarters.

Ric Campo -- Chairman and Chief Executive Officer

I would add one to that, which is we still do have the regulatory impediments in California and then D.C. proper and a little bit in suburban D.C. markets where we've made some real -- a reasonable estimates of when things return to normal. And by that, that means can you evict people who haven't paid rent for two and a half years.

Can you -- are there rental controls in place or renewal caps in place -- and we do believe that we're heading toward improvements and some of these things that are going to be taken off the table as far as impediments to running our business. But it doesn't take -- what does it take in today's environment for policymakers who have been kind of behind the curve on adapting to the pandemic is an endemic versus you get the first hint of the new variant. And it just seems like all bets are off and they retreat to the lowest common denominator of start talking about lockdowns again. So I would just add that to Alex's list of kind of what's out there that could be different and create headwinds for where we are in our portfolio.

Joshua Dennerlein -- Bank of America Merrill Lynch -- Analyst

Got it. One follow-up to that. On the occupancy, that moderation you're factoring in, what's driving that, that just conservatism and what you kind of normally see when occupancy is this high? Or is there something more specific that you're seeing?

Ric Campo -- Chairman and Chief Executive Officer

Well, we don't normally see occupancy in this eye. So I'll point that out in the first we're on record levels of occupancy. And obviously, that's one of the things that we're watching closely, and we are looking at our yield management software to make sure that that as occupancy gets to these type of levels that we are pushing rents and the natural effect of that is that you would expect to see occupancy sort of curtail a little bit.

Keith Oden -- Executive Vice Chairman and President

We've been doing this for -- and 96.5% doesn't feel conservative to me.

Ric Campo -- Chairman and Chief Executive Officer

It's an interesting thing because when you think about the demand. It has come -- people came out of the woodwork, right? And I think what they did is when you think about this is that pandemic, there were like 1 million millennials that we're missing from the market. A lot of those folks are still living at home or there are room make scenarios and form households. But then if you think about what happened then with pandemics, so everybody caught it up you have more people that were potted up during the pandemic.

And then once it started releasing those folks had jobs, number one. Number two, they probably have got razors because of the issues that are facing employers today. And they got checks from the government that matches stimulus checks. So when you think about it, you had -- by the end of last year, I think there were $2.7 trillion of excess savings.

Now we have about $2 trillion of excess savings -- so if you were potted up and you have weariness from COVID and being around the people that've been around for so long. You go out and form a household and run an apartment because you've got plenty of money in your pocket, you've got a job and life is good. And all of a sudden, this massive demand came out as a result of opening up and especially in our markets now you didn't have that happen in California or New York as fast as it did in Texas and Florida. But I think it just had a lot of people who didn't have funds precoded but have them now because of the late tightness of the labor force and the massive government stimulus.

Joshua Dennerlein -- Bank of America Merrill Lynch -- Analyst

Got it. Thank you.

Ric Campo -- Chairman and Chief Executive Officer

Sure.

Operator

Our next question comes from John Pawlowski with Green Street. Please go ahead.

John Pawlowski -- Green Street Advisors -- Analyst

Hey. Thanks for keeping the call going. Keith, can you give me a few details on how the team sets the boundaries of the bands for the letter grades and the outlook? Because there's pretty big disparities between job and completion ratio. If you take a look at Atlanta, nine jobs per unit deliver.

You take a look at Austin sub-three through the same grade and the same outlook. So any additional commentary would be great.

Keith Oden -- Executive Vice Chairman and President

Yes. The primary driver, John, is, first of all, we're only looking at one year out. We're looking for the forecast year. And if I were given three-year letter grades, they would probably move around somewhat.

But the primary driver is just looking at revenue growth that's in our forecast model. And so if you have to grade on a curve, which don't do, and I didn't do it as a 22-year-old graduate assistant teaching cost accounting at the University of Texas. So I'm not going to change now. I don't grab the curve.

And when the lowest revenue growth in your entire portfolio for the year forecast is DC for a change, which in any year, in any given year, you would say that's clearly an A because it's a plus at worse, but certainly. And then you go up from there to Houston at 6.5%. And while it sort of tails in comparison to our portfoliowide average, again, 6.5% for Houston. That's a solid A in my book and always will be.

So it's not -- you're right, the disparity on the -- there's quite a bit of disparity on the ratio for the year. But honestly, that tends to not -- that ratio tends to not swing things around in the forecast period because all that stuff gets delivered over 12 months and there's submarket, where is it being built and all those things. And our bottom-up budget process assumes that we know exactly what's going to be delivered in our submarkets. We take that into consideration as we do our revenue growth forecast.

So I still look at them and say every student in this class is an A student this year.

John Pawlowski -- Green Street Advisors -- Analyst

OK. That helps. One final one for me. Do you see around 4% revenue growth.

Could you give us a sense of what it would have been had to regulation curves being gone on January 1? I'm just trying to understand the kind of structural earnings power of D.C. right now?

Keith Oden -- Executive Vice Chairman and President

So the -- if you look at -- I'm going to use the forward-looking construct as a model kind of what the past year was -- and in the past year, we think in D.C., our overall -- it affected our overall results portfoliowide of about 40 basis points. I mean it's not a huge thing. And going forward, we do expect that we will see some relief in 2022 in D.C. proper and probably in the suburban markets as well.

We've kind of got that our thinking process is maybe somewhere around midyear, you get the beginnings of a return to normal. But that's -- again, like I said, that's crystal balling to a certain extent, and there's always the possibility that you get some new stealth variant that people get freaked out about and retreat to their the old habits. But yes, it's not a huge deal in our portfolio. It wasn't last year and wouldn't be in a reasonable scenario in 2022.

John Pawlowski -- Green Street Advisors -- Analyst

OK. Thank you for your time.

Keith Oden -- Executive Vice Chairman and President

Yep.

Operator

Our next question comes from Chandni Luthra with Goldman Sachs. Please go ahead.

Chandni Luthra -- Goldman Sachs -- Analyst

Hi. Good afternoon, and thank you for keeping this call going. So most of my questions have been answered. But your peer yesterday talked about seeing or expecting to see more opportunities for acquiring stabilized properties potentially later in this year.

What are your thoughts around that? Are you seeing similar situations developing? And how will you approach? Will you be aggressive if the opportunity presents? Just trying to gauge how would you approach that.

Ric Campo -- Chairman and Chief Executive Officer

Sure. Well, I don't think that based on what we're seeing through the -- at least year progresses the way we think it will, I don't think there'll be -- I think you're going to have a competitive acquisition market. I don't think that's going to change. I guess it sort of depends on what the Fed does, right? If Fed gets ahead of itself and all of a sudden, people are starting to forecast an economic slowdown because they are moving too fast.

And people worry about recession and rates go up really fast and you start worrying about that underlying economic activity. Maybe you'll have some softness in acquisitions. But right now, if they moderate interest rates and interest rates start going up, I don't -- there's still a wall of capital and there's still great supply and demand dynamics and when you think about pricing of real estate or any sort about it, it's really about liquidity and there's massive liquidity still in the market, and the Fed is not just riding the liquidity day one. And then the second biggest issue is supply and demand when you think about pricing.

And so liquidity is not going away and supply and demand is great. And so then you start thinking about inflation issues and then ultimately interest rates. And so I think I don't see an opportunity for rising cap rates or better pricing for multifamily assets this year. We will get our fair share.

And there's a $300 billion of transactions. We can eke out a few in our little corner of the world. So I think that we'll still be able to buy properties, but I think it's going to be a blood test for sure.

Chandni Luthra -- Goldman Sachs -- Analyst

Understood. And migration has sort of been a tremendous tailwind for the Sunbelt, obviously, through 2020 and then 2021 was perhaps just as robust. As we think about 2022, do you see any signs of reversal yet? I mean, I understand that two years is a long time in line and habit and things become permanent from temporary. But any signs that as we are in the endemic stages of this virus, perhaps those who moved from the coastal regions are now maybe thinking about moving back?

Ric Campo -- Chairman and Chief Executive Officer

It's interesting. If you look at -- from 2017 to 2020, Florida -- the two largest markets that had in-migration domestically were Florida and Texas. And on the Florida had 100,000 more people go to Florida versus the average for '17 through '20. Same thing in Texas.

We had a little less 75,000 people came in from domestic migration and the two states lost the most were in New York and California. So this out-migration of those high-cost, highly regulated markets has been going on for Keith mentioned earlier. And what happened during the pandemic is people moved because the other markets were open, right? I mean, you could go to a restaurant in Texas or in Florida and. And so that when you think about that part of the equation, I don't think you're going to have -- most economists don't think you're going to have, OK, we're going to run back to California or New York because we move because they're down buying houses and reach and apartments, and they don't really need to be in a specific place to their job yet because of the office situation.

So I think we probably don't have the big peak or the big spike if we are out of the. But it just will continue in its normal pattern, which is people want to be in a place with less regulation and lower housing prices and good weather, and that's what's been driving the Sunbelt for the last 20 years. And clearly, the -- I agree with Keith when he made the comment that California and New York are not going away. I mean there's still big large economies and people love to live there, and they'll still live there.

But at the margins, you're going to have -- the cost forces people out the businesses move. And so that's going to -- I think that's going to keep happening, but that doesn't mean that they're not going to do well long term because they have plenty of other in migration from immigrants and from -- and just natural birth that actually losing population generally.

Alex Jessett -- Chief Financial Officer

In our portfolio, in the fourth quarter of '21, 20.4% of all of our new leases in our Sunbelt were from people outside of the Sunbelt, and that is a 430-basis-point increase year over year. So to Rick's point, we're clearly seeing it in our portfolio, and we're seeing it continuing to accelerate.

Chandni Luthra -- Goldman Sachs -- Analyst

That's remarkable. Thank you for that color.

Operator

Our next question comes from Anthony Powell with Barclays. Please go ahead.

Anthony Powell -- Barclays -- Analyst

Hi. Good afternoon. A question on, I guess, housing affordability in your markets. How do you see the rise in rates impacting the rent versus buying, I guess, calculation in your markets? And we're seeing a lot of capital flow into rent to own, I guess, start-ups and schemes in a lot of your markets, how do you expect that development to maybe impact that decision over the long run?

Ric Campo -- Chairman and Chief Executive Officer

Affordability still remains really good in our portfolio. They're just -- even with rents going up as much as they are, you have to look at it on a relative basis if you average it over a three-year period since we didn't raise rents and rental went up four percent-ish in 2021 for the whole year. You're talking about a 4.5%, 5% rental increase over a three-year period with these big rent increases, right? So it's not like people are going up from -- that is just higher and higher and higher and they're having problems paying plus wages have gone up. So our markets still are very affordable.

-- when you look at actual rents relative to incomes. The other piece is the piece of the equation on single-family rentals. So single-family rentals are I think it's a really interesting market. And clearly, the public companies have proven that that single-family rental is a real thing, and they figured out how to run it, which is really good.

You think about if somebody goes -- when someone moves to a single-family rental, the average square footage is 2,000 square feet, compared to a 950-square-foot average apartment that Camden has. They tend to be more suburban rather than urban. They tend to be -- so most people when you think about buying a house or leasing a house, they're doing it for not capital -- money reasons. They're doing it for social reasons.

They need more space they have kids or they have -- they just need more space. And so with that said, we've never had a -- when you say we in the Houston suburb than it is in the recore, which it is. I mean if you are leasing in downtown Houston or Midtown, you can go out 30 miles out of downtown and buy a house and have an occupancy cost that's lower than your rent substantially. And -- but people don't do that because they want to be in the urban core, and they're not married.

They have average don't have kids. And so you have -- it's really not -- because I can go rent a house or buy a house -- that's not the -- and the money side of it, whether it's affordable or not is really not a drive for people to go do that. What drives in social position, they're older than can New North space, that kind of thing. So that really has occurred our market, obviously, because we're -- we still have more demand than we have supply and our occupancies 90% in Houston here 96 and to change yet.

You can go out and buy a house in the summer for a lot less than you can pay for rent merger.

Anthony Powell -- Barclays -- Analyst

Got it. So it sounds like you're not looking to get into the adjacent space SFR yourself over time, you're pretty content with a focus on multifamily. Is that fair?

Ric Campo -- Chairman and Chief Executive Officer

Well, I think it's an interesting space, and we've looked at it a lot. And it is to me, there's -- it's just another niche, right? And the question of whether we would get into a big, we tested things like, for example, we tested independent living. And we decided once we did a couple of independent living deals that the cycle in the market was very different than our normal than just a market-rate apartment project. So we decided that we wouldn't expand that.

And we're going to dabble in single-family Hilton and see how we like it. We think it's an interesting model because it's really just another segment is as long as it -- we can operate efficiently, the way we operate our apartments then it might be a nice growth area over some period of time.

Anthony Powell -- Barclays -- Analyst

Got it. Great. Thank you.

Ric Campo -- Chairman and Chief Executive Officer

Sure. I think if there aren't any more questions in the queue, I think we are -- that was the last one? Great. Well, we appreciate your time and we'll see some of you in South Florida, and -- so take care, and we'll talk to you next time. Thanks.

Keith Oden -- Executive Vice Chairman and President

Take care. Bye-bye.

Alex Jessett -- Chief Financial Officer

Bye.

Ric Campo -- Chairman and Chief Executive Officer

Bye.

Operator

[Operator signoff]

Duration: 86 minutes

Call participants:

Kim Callahan

Ric Campo -- Chairman and Chief Executive Officer

Keith Oden -- Executive Vice Chairman and President

Alex Jessett -- Chief Financial Officer

Haendel St. Juste -- Mizuho Securities -- Analyst

Derek Johnston -- Deutsche Bank -- Analyst

Nick Joseph -- Citi -- Analyst

Brad Heffern -- RBC Capital Markets --- Analyst

Neil Malkin -- Capital One Securities -- Analyst

John Kim -- BMO Capital Markets -- Analyst

Austin Wurschmidt -- KeyBanc Capital Markets -- Analyst

Joshua Dennerlein -- Bank of America Merrill Lynch -- Analyst

John Pawlowski -- Green Street Advisors -- Analyst

Chandni Luthra -- Goldman Sachs -- Analyst

Anthony Powell -- Barclays -- Analyst

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