An influx of multifamily housing hitting the market is expected to “dampen” the national average asking rent growth in 2024, according to a report from Yardi Matrix. The report also predicts that the economy will “slow significantly for two or three quarters.”
This new projection suggests that even though the national asking rent jumped by 1.6% in 2023, rent appreciation should still decline as a result of this record-high supply, which will directly impact—and decrease—rent appreciation in markets that saw extreme growth due to the pandemic.
Growth in a majority of national markets took place during the first six months of 2023. Month-over-month growth peaked in April before plummeting in July, and reached a negative range in September.
Key highlights:
Worst rental performers in 2023:
- Las Vegas -2.5%
- Boise -2.4%
- Phoenix -2.2%
- Austin -1.6%
- Reno -1.2%
Top performers:
- Lafayette 11.6%
- Madison 9.5%
- Knoxville 8.9%
- Syracuse 8.1%
The study also noted that rents and asking rents have a noticeable gap, but they will “continue to shrink as asking rent increases remain muted in the near term.”
Major takeaway:
“The main story of 2024 will be one of record supply coming online that will depress rent appreciation in many of the markets that saw explosive growth during the pandemic, and a handful of markets could end the year in negative growth territory,” wrote the author of the report. “However, absorption has been robust, and we expect it to continue to perform well in the markets that are receiving a large amount of supply, although it might take a year or so for the new supply to be fully absorbed. Additionally, almost all of the new supply will be competing directly with existing Class A units, so we expect to see less growth in asking rents at the top of the market, and stronger growth in workforce and renter-by-necessity units.”
For the full report, click here.
