National year-over-year rents continued to remain positive but fell to 4.1% in November, compared to 4.8% at the end of October, according to a new report from Apartments.com.
Apartments.com’s November multifamily rent growth trends report found that none of the top 40 largest markets saw their year-over-year asking rents expand in the month of November. Historically, the fourth quarter tends to be slower for multifamily, but the report states that we are witnessing a weaker market overall with the downward rent growth and volatile market conditions.
- Only nine of the 40 largest markets saw month-over-month rents holding positive or at zero.
- Miami held the top rent growth spot alongside Midwest and Gateway locations that have gained traction in recent weeks and currently hold positions in the top 10.
- Las Vegas and Phoenix have both witnessed a dramatic slowing of growth and sit at the bottom of the annual rent growth ranking for November.
- Las Vegas’ year-over-year asking rents decreased from 22.0% in Q4 2021 to 0.4% at the end of November.
- Phoenix isn’t far behind with year-over-year rents dropping to 0.4% from 20.8% just eleven months earlier.
- San Jose rents declined the most over the last 30 days, down $28 or 0.9%.
- Sunbelt markets constitute five of the 10 worst-performing rent growth markets over the past month, with Coastal California markets like the East Bay and San Diego also weakening.
- However, Raleigh takes the top spot in November with rents retreating by $17 or 1.1%. Seattle wasn’t far behind with a 1.0% rent decrease.
Jay Lybik, National Director of Multifamily Analytics at CoStar Group, said that “While sequential monthly rents have decreased for four straight months, we witnessed a slower decline from October to November, with rents down $6 or 0.4% compared to a decrease of 0.6% just 30 days prior. As market conditions slip further out of equilibrium with new deliveries far outpacing demand, we expect monthly rents to continue their downward trend.”
“For a sign of how fast and deep annual rents have fallen thus far in 2022, Las Vegas and Phoenix are striking examples,” said the author of the report. “Almost a year ago, both of these markets were recording rents up 20% and today, they are just barely positive. With a potential recession looming in the first half of 2023, the current mismatch between supply and demand appears likely to widen even more. Therefore, the downward pressure on rents appears likely to continue across the nation, but especially in over-supplied Sun Belt markets.”
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