After approximately 18 straight months of record-breaking rent increases in nearly all markets national rent growth has ground to a halt, according to a new report by Yardi Matrix, released this week.
The report found that of 136 multifamily markets, 56 had month-over-month declines in asking rents in September, compared to 53 markets with declining rents in August and 18 markets with declining rents in July.
Key highlights:
- 22 markets saw asking rents fall MoM in September, versus 21 markets in August and seven in July.
- The unweighted market average of asking rents rose less than one-tenth of one percent, which is the smallest month-over-month increase for September since 2017, and only 35% of the average growth in asking rents for the month of September over the past 15 years.
- Most of the volatility is being driven by Lifestyle buildings, where asking rents are down an average of 0.15% MoM across all 136 markets we forecast, and down an average of 0.41% MoM in the Yardi top 30.
- Asking rents in Lifestyle buildings increased in only five of the top 30—Miami, Nashville, Boston, Baltimore and Kansas City—while an equal number—Indianapolis, Chicago, Atlanta, the Inland Empire and Seattle—saw monthly declines in Lifestyle asking rents of more than 1%.
- Asking rents for Renter-by-Necessity buildings are up an average of 0.23% across all 136 markets, and an average of 0.17% for the top 30.
Major takeaway:
“Headline end-of-year growth for 2022 will still be significantly elevated from the long-term average, but almost all of that growth has already occurred, and most markets will finish out the year with minimal additional growth,” said Andrew Semmes, senior research analyst at Yardi Matrix and author of the report. “Moving into 2023, we do not expect to see rents accelerate again nearly as much as they did in the first half of 2021 and 2022, but inflationary pressures remain high and employment gains are still very strong, so there is potential for a stronger-than-average jump out of the gate in the spring.”
Added Semmes, “However, eventually the Fed’s actions will noticeably cause inflation to fall and unemployment to rise, and when that happens rent growth will largely become anemic. Until the Fed’s policy moves work their way through the economy, though, we should expect a period of increased volatility.”
For the full report, click here.
