Sean J. Breslin
Chief Operating Officer at AvalonBay Communities
All right. Thanks, Kevin.
Turning to Slide 10. Key portfolio indicators were strong during Q2, and we're off to a good start in Q3. In Chart 1, turnover remains well below historical norms in part supported by a lower level of move-outs to purchase a home. In Q2 specifically, turnover was down 600 basis points year-over-year or roughly 12% and was lower than last year in every region. Lower turnover supported relatively stable occupancy and drove higher rent change as we move through the quarter. Effective rent change increased from 3.2% in April to 4% in June before moderating into the high 3% range during July. As expected, our East Coast regions delivered the strongest rent change in Q2 of 4.2% and with our Mid-Atlantic portfolio leading the way of roughly 5.5%.
Our Northern Virginia and suburban Maryland assets continue to demonstrate strong momentum, but the District of Columbia is still lagging due to weaker demand which is in part due to the federal government's return to the office policies and ongoing supply, which is projected to be roughly 4% of existing inventory this year before declining to approximately 2.5% in 2025. Our Boston portfolio, which represents high-quality assets and predominantly supply protected suburban submarkets produced rent change in the high 4s during the quarter. New supply in Boston has declined from the low 2% range a year ago to roughly 1.5% this year and is expected to decline to just above 1% next year for the urban supply projected to be substantially higher than suburban supply. Assuming a relatively static demand environment, the outlook for our suburban Boston portfolio remains quite positive.
The Metro New York, New Jersey portfolio 2/3 of which is diversified across various suburban submarkets in Westchester, Long Island and Central and Northern New Jersey, delivered 4% rent change during the quarter. Recently, the strongest growth has occurred across the various submarkets in New York City, Northern New Jersey and Long Island. Some of the more distant locations in Central New Jersey have lag as employees increase their in-office Workday requirements in the city. The West Coast established regions produced rent change in the 3% range our Sudattle portfolio, which is primarily located in east side and north-end submarkets, led the way with 6% rent change during the quarter. While there are some pockets of new supply in select suburban submarkets, most notably Redmond, most of the new inventory is concentrated in urban submarkets and is not competitive with our portfolio.
On the demand front, major employers like Microsoft and Amazon require more in-person work has supported the increased demand we've experienced throughout the first half of the year. Northern and Southern California lags Seattle with rent change in the mid-2% range. In Northern California, we had better momentum in San Francisco and San Jose, with 3.2% and 4% rent change, respectively, during Q2. However, the East Bay remains soft with the rent change of 50 basis points during the quarter. Given the supply is projected to be below 1% of stock across the major markets in Northern California for this year and next year, trends could continue to improve in the near future to the extent we realize a modestly stronger level of demand. Moving down to Southern California.
Orange County produced the strongest rent change at 4.2%, followed by San Diego roughly 3% and LA in the 2% range. Orange County and San Diego have been healthy markets year-to-date, but performance across the various submarkets in LA has been choppy and highly correlated with the volume of inventory returning to the submarket from non-paying residents. As it relates to bad debt, which is depicted in Chart 4 on Slide 10, while we're encouraged with the year-to-date trends in underlying bad debt across our same-store portfolio, results were choppy during the second quarter. We're still expecting bad debt to average roughly 1.7% for the full year 2024 at approximately 60 basis point improvement from 2023. As we've stated previously, pre-pandemic bad debt for our portfolio was 50 to 70 basis points. So to the extent we reach that level, we realized an incremental $25 million in revenue or more over the next several quarters.
Transitioning to Slide 11 to address our updated revenue outlook for the year. We now expect same-store revenue growth of 3.5% for 2024, an increase of 40 basis points from our most recent outlook. The increased outlook is primarily driven by stronger lease rates as lower turnover and stronger occupancy in the first half of the year allowed us to achieve higher rental rates than originally anticipated, a trend we expect to continue. We now expect like term effective rent change in the 3% range for the full year 2024, up roughly 100 basis points from the 2% level we expected at the beginning of the year. We realized 3% rent change in the first half of the year and expect to produce similar performance in the second half. We've seen rent change begin to moderate to start the third quarter and consistent with seasonal norms expected to decelerate through the back half of the year. We expect renewals in the mid-4% range for the balance of the year, while new move-ins averaged roughly 1.5%. The near-term outlook for lease renewals remains healthy with offers in the low 6% range for August and September.
Moving to Slide 12. You can see where we're projecting stronger revenue performance relative to our prior outlook. In our established regions, we're expecting substantially stronger growth in New England, the Mid-Atlantic and Pacific Northwest. We we're expecting modestly better growth in New York, New Jersey and almost no change in Northern and Southern California. In our expansion regions, Denver and Southeast Florida are expected to perform slightly better than we originally anticipated, but our other expansion regions of Dallas and Charlotte are expected to be weaker primarily as a result of the continued challenging levels of new supply in those markets.
And then finishing on Slide 13, we're on track to realize roughly $10 million of incremental NOI from our operating initiatives in 2024. You can see those results in our same-store portfolio in 2 areas: first, the expected contribution from other rental revenue, which is projected to increase by 14% year-over-year; and second, highly constrained payroll costs, which have declined year-to-date and are expected to grow at roughly 1% for 2024, which is well below the average merit increase of approximately 4% and is related to a reduction in the number of on-site positions. These reductions relate to the enhanced efficiency of our teams, which is supported by our digital efforts and enabled by our new labor strategy.
From a broader perspective, we're on track with the Horizon 1 and 2 financial objectives we communicated during our Investor Day last year, which reflect generating an incremental $80 million NOI from our portfolio. At year-end 2024, we expect to have achieved roughly $37 million of that $80 million and look forward to producing the balance of it over the next few years. We'll continue to keep you informed about our efforts and achievements as we innovate further in the future.
Now I'll turn it over to Matt to address recently set performance, development starts and capital recycling activities. Matt?
