Michael L. Manelis
Executive Vice President and Chief Operating Officer at Equity Residential
Thanks, Mark, and thanks to everybody for joining us today. I'm going to give some brief comments regarding current market conditions and then we can turn it over to the operator for question-and-answers.
We just completed one of the best leasing seasons in our history. Strong demand across our markets produced high occupancy as well as continued pricing power. As we think about the trajectory of our pricing for the full year, we clearly benefited from a supercharged spring leasing season with more robust pricing power that started earlier in the spring in many markets than we have traditionally seen. This strength led us to adjust our same-store revenues upward in July and to set our current expectation slightly above the midpoint or at 10.6% for the full year 2022, which is the best same-store revenue growth in our history.
In both the earnings release and in the accompanying management presentation, we have provided some key performance metrics, which demonstrate the strength of the leasing season and the fundamentals that position this portfolio well for 2023. This includes updates on the percentage of our residents renewing with us, which remains very healthy and is now consistent with historical levels after some moderation in the summer, which was expected as we are moving residents to current market rents. This performance supports occupancy, which continues to be solid at 96.2% even as we enter the slower part of the leasing season.
As you can see on Page 4 of the accompanying management presentation and as we disclosed in our August 31st press release, our rents peaked in the first week of August and then moderate which is typical for this time of year. Seattle and San Francisco are the two markets that stand out with more recent moderation than anticipated. Concessions are being used more than declines in rental rates in these markets to drive traffic. All other markets are basically in line with normal rent seasonality and overall, we continue to have good demand for our units in all of the markets with strong foot traffic, which is generally in line with our historical averages for this time of the year.
While we see the same headlines as everyone else on tech hiring freezes and some layoffs, our revenue performance is holding up although we readily admit that we have a lagging indicator. Right now, New York and Southern California continue to lead in both same-store revenue growth performance and our overall current pricing fundamentals. Seattle and San Francisco while producing strong annual same-store revenue growth are the markets that have struggled through the most of the year to gain meaningful momentum. Longer-term, these two markets present growth opportunities as they continue to be under-housed and have the potential to show improvement very quickly with the infusion of more certainty of jobs.
As Mark mentioned, we are not providing 2023 guidance this quarter but we understand that 2023 is top-of-mind. As a result, we provided a framework of helpful building blocks for same-store revenue and expense growth, which you can find on Pages 5 through 8 of the management presentation. We would expect 2023 to produce quite good above-historical-average revenue growth based on activity already built into the rent roll from excellent rent growth that occurred in 2022. We call this our forecasted embedded growth, which reflects the contribution to next year's revenue growth, assuming no changes to the rent roll occur. We expect this to be about 4.5% by year end. For historical context, in a normal year, our forecasted embedded growth would be just above 1%. You can see this on Page 6 of the presentation.
In addition to this favorable embedded growth, we are positively positioned for leasing activity in 2023 moving forward. Our loss to lease, which refers to the revenue improvement we can expect from moving leases in place today to current market levels, is significantly larger than historical years as evident on Page 7. Our current loss to lease of approximately 5% will seasonally moderate through year end but certainly positions us for growth when leases mature and we capture this loss in '23. For historical context, our loss to lease would be about 50 basis points at the end of a typical non-recessionary year. With that setup in mind, let's not forget about actual market rent growth during 2023 and its contribution to same-store revenue growth.
Current visibility here is most opaque. While our business has strong long-term fundamentals, the uncertainty around future economic conditions that Mark just mentioned is high. This 2023 intra-period growth should remain healthy as favorable demographics, continued low employment rates in our target demographic, strong income growth, and less direct supply pressure in many of our markets point to the potential to see a strong spring leasing season. That being said, 2023 is unlikely to be as robust as the unprecedented rent growth numbers of 2022. On the occupancy side, general demand trends, including improving retention, support strong occupancy above 96% for the balance of 2022 and should carry through into 2023 unless there is a substantial loss of jobs in our target renter demographic.
Outside of occupancy and the core revenue drivers that I just discussed, bad debt net will likely continue to play a role in revenue growth as we expect the trend of reduced levels of resident delinquency to continue into 2023. The lack of governmental rental assistance in '23 compared to the $31 million we will receive in 2022 will require continued improvement in resident behavior -- payment behaviors in order to return us closer to historical norms and contribute positively to revenue growth. An improved regulatory environment coupled with the high quality of our affluent renter should lead us in this direction but 2023 may be a bit of a transition year to get all the way there.
Switching to same-store expense growth. As you can see in the press release, 2022 benefited from limited growth in property tax expense and great controls of our payroll expenses. And as a result, we expect to produce same-store expense growth of 3.3% for the full year 2022. As we described in the management presentation, if the inflationary environment continues as it is today, we would expect expense growth in '23 to be elevated from these industry-leading levels in 2022.
While we expect that less controllable areas like real-estate tax may come under more pressure, we remain focused on initiatives that can assist in moderating growth in areas that are more controllable, like payroll and repairs and maintenance. We have had great success in creating efficiencies in our sales and office functions with over half of our portfolio running with shared resources and we expect that to continue to benefit us in 2023 as we centralize onsite activities such as application processing and our move-out and collection process.
On the service side of the business, we continue to leverage our mobile platform to create more opportunities to pile our resources across multiple properties. We also will strategically leverage third parties for outsourcing turns in assisting with after-hours work to reduce overtime pressure in the portfolio. Overall, we are well-positioned to continue the trend of expanding our fully loaded net operating margin, which currently sits around 69% into 2023. I want to give a quick shout-out to our amazing teams across our platform for their continued dedication to the residents and focus on delivering these terrific operating results.
With that, I will [Technical Issues] the call over to the operator to begin the Q&A session.
