Michael L. Manelis
Executive Vice President & Chief Operating Officer at Equity Residential
Thanks, Mark. Let me start with a huge shout out to the entire Equity Residential team for their continued dedication and hard work. They remain relentless in serving our customers and working together to deliver the strongest result in the history of our company. As expected, we had a very good second quarter. Resident turnover remains at all time lows, with strong demand driving robust pricing power and high physical occupancy at 96.7% Pricing trend, which is the net effective price of our units inclusive of concessions, has grown almost 10% since the beginning of the year, which is well above the 6% range that historically characterizes a very good year. This pricing strength has contributed to an unprecedented new lease change with July expected to be about 16.5% and a significant loss to lease of 12.5%. July's moderation in the new lease change is less than we expected and is caused by a more challenging 2021 comparable period, not a loss in operating momentum. As our sequential rents continue to grow, our current position will contribute to continued above average second-half revenue growth and strong embedded growth for 2023.
Our residents are well-employed and as Mark just mentioned, seeing their incomes rise. The unemployment rate for the college-educated continues to be below 3% and while we see the same headlines that you do about slowdowns in hiring or even layoffs, we are not seeing any impact on new leases or renewals. Our operating dashboards continue to flash green. Given the amount of hiring that the tech firms have done over the last few years, even with the moderation, they are still employing more people than they did pre-pandemic. The tenure of our residents is also improved to 2.3 years on average compared to 2.1 years last year. And we are losing fewer and fewer residents to home purchase as single-family homeownership gets more and more challenging. In fact, in the second quarter, we had a 22% decrease compared to the second quarter of '21 in the number of residents who moved out to buy a home.
We remain aware of the economic headwinds and we will position the portfolio more defensively if need be, but given the significant loss to lease, strong retention and healthy demand we are seeing, we remain optimistic. That said, as is true every year in our business, we expect rent growth to peak and then moderate seasonally in the summer. So we are happy to report that has not yet occurred.
In sum, our operating metrics and forecast for the balance of the year remain beyond historical norms and Bob will provide more color on the building blocks of our revised guidance in his remarks.
Let me take a minute and provide some color on market performance. In Boston, demand ramped up in both the urban and suburban submarkets driving a 90 base improvement in physical occupancy over the first quarter along with robust pricing power that came earlier in the season than usual. Rents have begun to moderate in this market. However, it is not uncommon to see modest re-acceleration in August as students typically return then and are an important source of demand for our portfolio. We are definitely bullish on the second half performance, particularly in the suburban submarkets and remain cautiously optimistic on the city of Boston and Cambridge's ability to absorb some of the new units that are scheduled to be delivered later this year.
The market continues to have strong employment with life sciences continuing to expand their footprint. New York continues with very healthy pricing power and demand. After significant impact from the pandemic, New York same store revenue and NOI are now fully recovered back to 2019 levels. Physical occupancy is 97%, new lease change and renewal rate achieved were robust in the second quarter with a vibrant environment continuing to attract our affluent renter demographic who is well-employed and can afford to pay our rent. Despite these rental increases, our new residents are still paying us only approximately 18% of their income and our data indicates that our rents in this market have grown more slowly over the last three [Technical Issues] year of our new renters.
The Washington DC market continues to perform well with physical occupancy at 96.7% and good growth in both new lease and renewals in the quarter. The absorption of new supply was good in the first half of the year, but we're keeping an eye on it as the year progresses. There are more than 12,500 units being delivered in 2022 with over 7,000 of them coming in the back half of the year from a competitive leasing standpoint. The absorption rate slowed a little bit in the second quarter, but still remains very strong, and at current levels should support continued pricing power. While this market has historically shown high levels of supply, it is also one of the most resilient in the country during periods of uncertainty. The DC area unemployment rate has returned to pre-pandemic levels and sits below the national average, with good growth in the professional services and education, health categories where many of our residents are employed.
Heading west, Denver has solid demand and good pricing power, stronger occupancy in the suburban portfolio and we expect some pressure from new supply in the downtown submarket. The Denver job market continues to enjoy a healthy growth across a number of sectors including the professional and business services. In Seattle, continued improvement on the quality of life issues is helping drive a come back in the city, which now has rents that are just over pre-pandemic levels. Physical occupancy is above 96% and we continue to see strength in new lease rates and renewals. Concession use is isolated to the city and continues to moderate with approximately 20% of our applications receiving just under a month. This is down from over 50% from the first quarter and occupancy in the downtown submarket is now just over 96% as compared to 93% in March.
Supply impact for us in 2022 is limited to our high-rise communities in the city, while 2023 shows less direct competition from new supply overall. This market continues to demonstrate high wage job creation and while job postings from the major employers did moderate this quarter, the number of available positions is still near all-time record highs.
The San Francisco market continues to improve with high occupancy supporting growth in both new lease and renewal rents. The issues around quality of life are improving, but downtown San Francisco is still taking more time to return to pre-pandemic conditions than other markets across the country. Remember that the city was one of the last areas to ease COVID rules and just recently stepped up its focus on crime issues. While rents continue to be below pre-pandemic levels in the downtown submarket, they are working their way back. All of our other submarkets in San Francisco are at or above pre-pandemic pricing levels. Overall, I would say we are very optimistic on current trends in San Francisco but have an eye on new supply that is expected to be delivered in the back half of the year and could erode pricing power if demand slows.
Finally, Southern California continues to perform well with physical occupancy at nearly 97%, driving strong rental growth in both new lease and renewal rates. Specific to Los Angeles, the market is seeing elevated new supply as compared to the past several years, but the overall market remains under-supplied. Even in some markets like Korea Town where we expected pressure this year, the new supply is being quickly absorbed leaving us better pricing power than we anticipated. On the delinquency front, we saw a modest improvement in the second quarter and the payment behavior of our residents and continued rental relief receipts. As we look into the second half of the year, we don't expect rental relief receipts to be as material, which will lead to revenue growth moderation despite strong continued fundamentals.
Before I turn it over to Bob, I just want to give a quick update on some of our innovation initiatives. Innovation is a major contributor to our ability to create operating efficiencies while continuing to maintain a high level of customer service. Despite meaningful progress, we continue to have a lot of opportunity ahead of us as we integrate our initiatives, continue to leverage technology and advance our overall skill set. Just over half of our properties now operate without fully dedicated staff. We continue to invest in and implement software and processes that further enable the autonomous leasing experience, allowing customers to tour a community and interact with the member of our team or our AI leasing agent as much or as little as they desire. Self-guided tours continue to dominate as a preferred tour option, with just about 90% of all tours in the second quarter being self-guided. We are extremely excited about the future as we innovate to maximize revenue and minimize expense growth while continuing to provide a great experience for our residents and employees.
I will now turn the call over to Bob.