Michael D. Lacy
Senior Vice President - Property Operations at UDR
Thanks, Tom. To begin, strong sequential same-store revenue growth of 4.7%, drove year-over-year same-store revenue and NOI growth of 12.7% and 15.5% on a straight-line basis. This was an acceleration of 150 and 110 basis points, respectively, compared to our second quarter results and were better than expected. Key components of these results and our demand drivers included: first, year-over-year effective blended lease rate growth remained firmly above historical norms at 13.1%. We traded a nominal amount of occupancy to achieve this rental rate growth, but also improved our 2023 rent roll and locked in more of our approximately 5% 2023 earning. This will be the highest earn in our history by at least 200 basis points.
Second, our in-place residents are increasingly paying rent on time. Collection rates improved sequentially in the third quarter and the number of long-term delinquent residents in our portfolio continued to decline, which reduced our bad debt reserve and accounts receivable balances. Third, portfolio-wide rent-to-income ratios remain consistent with history in the low 20% range. Employment and wage growth remains strong, and we have seen no evidence to date of residents choosing to double up.
Fourth, traffic and applications remain above typical seasonal levels, allowing us to continue to push rate growth. Fifth, concessions are de minimis across our portfolio, with exceptions being one to two weeks on average in specific submarkets of San Francisco, Washington, D.C. and Boston. And last, due to rising mortgage rates, renting an apartment is approximately 50% less expensive than owning a home versus 35% less expensive pre-COVID.
During the third quarter, only 7% of residents have moved out, did so to purchase a home. This is the lowest level we have seen and is 35% lower compared to a year ago. In total, we believe demand for apartments remains broad-based. We continue to monitor the financial health of our residents for signs of potential distress across our portfolio. But the U.S. consumer and our residents have proven resilient thus far, and we've yet to see any meaningful cracks in our forward demand indicators.
Moving on to expenses. Quarterly same-store expenses rose 7.2% on a year-over-year basis. While this is higher than usual, our margin continues to expand as we operate a 70% plus margin business. Some of this expense growth was in our control, while the remainder was not. First, what was in our control? We continue to push rent growth, which resulted in 450 more unit turns than a year ago. Positively, we re-leased these homes at 22% higher average effective rate or 900 basis points above our average renewal rate for the quarter.
In addition, we regained 200 homes from long-term non-payers. Combined, this negatively impacted R&M and A&M during the quarter by $1.6 million, which should generate approximately $7 million in incremental revenue over the next 12 months. Had we not made these trades, our year-over-year same-store expense growth would have been approximately 5.7%. Utilities also contributed to our above-trend growth as energy costs increased. However, as we are typically reimbursed by residents for approximately 70% of this line item, same-store NOI was not meaningfully impacted.
Next, what we cannot control. Higher real estate taxes, which comprise 40% of all expenses, grew by over 5%. Pressure points consisted of Texas and Florida where valuations increased. And New York City, where the burn-off of our 421 abatement continues. Insurance, which is a relatively small expense for us, also increased dramatically due to higher premiums and claims. Looking ahead to the fourth quarter, we saw the return of typical seasonality in market rents after Labor Day. This factor, combined with our pricing strategy to drive rate growth drove a quicker capture of our loss to lease.
For October, blended lease rate growth is expected to be roughly 7% to 8%, comprised of new lease rate growth of 4.5% to 5% and renewals of approximately 10%. For the fourth quarter, we expect blended lease rate growth to average 6% to 7% with the sequential deceleration due to toughening year-over-year comps. Taken together, we increased our full-year 2022 same-store revenue and NOI guidance ranges for the third time this year in conjunction with our release yesterday. We now expect to achieve 2022 same-store revenue and NOI growth of 11.5% and 14.4% at the midpoint on a straight-line basis or an increase of 50 basis points and 38 basis points, respectively.
Finally, we are continuing to drive forward on innovation with the intent of further expanding our 325 basis point controllable operating margin advantage versus peers. Initiatives underway are expected to generate roughly $40 million in incremental NOI by year-end 2025 and will be increasingly focused on revenue upside versus expense controls. These include, first, launching building-wide WiFi that allows whole building connectivity, a seamless setup at move-in for new residents, and enhanced control over smart hubs to reduce energy consumption and improve Scope three emissions. UDR has made a capital investment in equipment, which provides improved economics and more control over the scope of the project versus traditional bulk deals. We believe this initiative could generate more than $20 million in incremental NOI once fully rolled out by 2025.
Second, leveraging advanced resident leads and virtual leasing technology to better generate qualified leads and track prospects, optimize marketing activities, close leases faster, and enhance real-time pricing. Third, simplifying our move-in process to reduce vacant days while simultaneously offering a better tool to sell other income initiatives such as renters insurance, parking, and storage, thereby increasing our share of wallet. Fourth, improving our dynamic work order scheduling through enhanced vendor management tools, which should reduce vacant days through return process, while improving asset management to better assess the repair versus replace decision.
And fifth, expanding the number of communities we are able to operate without dedicated on-site personnel from 25 today to 35 over the next 12 months. This approach, whereby leasing and resident services activities conducted virtually improves our margin, helps mitigate inflationary costs. Today, we have increased the number of apartment homes managed per associate by 60% versus pre-COVID levels. Last, a special thanks goes out to all our teams for their ongoing dedication, but especially our teams in Tampa and Orlando. Natural disasters, especially those of magnitude of Hurricane Ian are unpredictable. And I applaud your round-the-clock efforts to safeguard our communities, protect our residents, and return our properties to normal operations.
And now I'll turn the call over to Joe.
