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Multifamily Rents Up Slightly Last Month, with Regional Variance, Reports Yardi Matrix

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Average U.S. asking rent gained $1 in February, increasing for the first time since Fall 2023

Santa Barbara, CA – March 13, 2024 (PRNewswire) National asking rents posted their first increase in over seven months in February, according to the latest Yardi® Matrix National Multifamily Report.

The average U.S. asking rent rose $1 to $1,713 in February, up 0.6 percent year-over-year (YoY), while occupancy decreased 60 basis points YoY to 94.5 percent as of January.

Markets in the Northeast and Midwest continued to register rent increases, in contrast to rent contractions in high-supply Sun Belt markets. Of Yardi Matrix’s top 30 metros, 13 posted rent declines, and five were down by three percent or more YoY. Occupancy was positive only in San Francisco, up 0.1 percent.

While rents generally show signs of stability, factors including supply, demand, regional metrics and affordability will determine the market’s 2024 performance. Occupancy is likely to continue to decline, with one million new rental units expected to come online through the end of 2025. Already, heavy deliveries in Sun Belt and Southwest metros have eroded rent growth, with more construction underway.

“While high-demand markets are likely to record weak rent growth over the next year or two, the seeds of a rebound have been planted, as starts are declining and deliveries will drop in 2026 and 2027,” states the report.

Single-family rents declined $2 in February to $2,133, equating to a 1.2 percent year-over-year increase. Single family occupancy remained flat at 96.5 percent in January. High mortgage rates and the scarcity of for-sale assets continue to boost demand.

Gain more insight in the new Yardi Matrix National Multifamily Report.

Yardi Matrix offers the industry’s most comprehensive market intelligence tool for investment professionals, equity investors, lenders and property managers who underwrite and manage investments in commercial real estate. Yardi Matrix covers multifamily, student housing, vacant land, industrial, office, retail and self storage property types. Email matrix@yardi.com, call 480-663-1149 or visit yardimatrix.com to learn more.

About Yardi

Yardi® develops industry-leading software for all types and sizes of real estate companies across the world. With over 9,000 employees, Yardi is working with our clients to drive significant innovation in the real estate industry. For more information on how Yardi is Energized for Tomorrow, visit yardi.com.

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SOURCE Yardi

U.S. Multifamily Market Faces Challenges Ahead, According to New Yardi Matrix Outlook

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Rents expected to taper off as influx of new supply anticipated in 2024

Santa Barbara, CA – Dec. 20, 2023 (PRNewswire) After two years of stellar growth, rents decelerated in 2023, despite demand still at strong levels thanks to a resilient economy. The 2024 Multifamily Outlook from Yardi® Matrix anticipates a year of challenges, including slowing national rent growth.

National rent growth moderated to 0.4 percent year-over-year through November 2023, from a combined 23.5 percent in 2021 and 2022. Absorption stabilized at 300,000 apartment units in 2023, compared to 600,000 in 2021 and 200,000 in 2022.

Yardi Matrix expects that rent growth and occupancy will be heavily tested next year. Of the 1.2 million apartment units under construction at the start of 2024, 510,000 are expected to be delivered by the end of the year, the highest number in decades.

“We expect demand for multifamily to remain healthy in 2024, but headwinds that include slower job growth, increasing supply and waning affordability in some markets will keep rent growth restrained again,” state analysts, forecasting a tepid 1.5 percent rent growth nationally.

The 2024 forecast calls for Midwest metros to lead rent growth, and the Sunbelt and West markets to continue to experience in-migration from the coasts both by residents and businesses. Sunbelt markets such as Austin, Nashville, Charlotte and Orlando are already seeing stalling rent growth, and despite robust population and job growth, they boast high levels of new supply, which will further suppress rents.

On the investment front, already down by 70 percent year-over-year, multifamily sales will likely remain sluggish in 2024, due to the impact of interest rates and pricing uncertainty.

Gain more insights in the latest U.S. Multifamily Outlook from Yardi Matrix.

Yardi Matrix offers the industry’s most comprehensive market intelligence tool for investment professionals, equity investors, lenders and property managers who underwrite and manage investments in commercial real estate. Yardi Matrix covers multifamily, student housing, vacant land, industrial, office, retail and self storage property types. Email matrix@yardi.com, call 480-663-1149 or visit yardimatrix.com to learn more.

About Yardi

Yardi® develops industry-leading software for all types and sizes of real estate companies across the world. With over 9,000 employees, Yardi is working with our clients to drive significant innovation in the real estate industry. For more information on how Yardi is Energized for Tomorrow, visit yardi.com.

SOURCE Yardi

U.S. Multifamily Outlook: Rent Growth Remains Positive Despite Economic Uncertainty, Says Yardi Matrix

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Industry investment, however, faces significant headwinds from high mortgage rates

Santa Barbara, CA – June 28, 2023 (PRNewswire) Multifamily rents continued to increase through the first half of 2023, despite challenges for the sector and continuing economic uncertainty. But job growth has remained robust and new households keep forming, creating apartment demand and ongoing rent growth.

“We anticipate that rents will continue to increase modestly over the course of the year as demand has firmed, albeit at a more moderate rate in line with historic growth levels,” says Yardi® Matrix experts in a newly released U.S. Multifamily Outlook.

Through the first five months of 2023, U.S. asking rents rose $17, or 0.9 percent, with year-over-year growth falling to 2.6 percent.

“We expect continued deceleration, with rent growth of 2.5 percent for the full year,” states the outlook. The average U.S. apartment rent reached an all-time high of $1,716 in May.

Challenges for the sector include slowing demand, growing issues with affordability, slower population growth and competition from a large number of new units coming online through 2024.

The capital side of the industry has suffered due to heightened interest rates, which show little sign of decreasing in the near-term. Property values are down 15-20 percent from their peak and are still declining due to the higher cost of capital.

New deliveries will be high at least through the end of 2024, as the 1 million units under construction come online. New starts are now declining, however, because debt is more expensive and fewer banks are financing construction.

Household formation, which drove the 22 percent cumulative growth in U.S. asking rents over 2021 and 2022, has slowed but remains positive. Although some pandemic demographic trends are moderating, the desire for more space to balance living, working and family appears to have staying power and should continue to drive demand.

Demand is also boosted by the sharp drop in home sales, which keeps renters in apartments. High mortgage rates also create an affordability hurdle for first-time buyers and middle-income families looking to trade up.

Home mortgage rates rose to 6.5 percent in March 2023, up 230 basis points from March 2022, increasing monthly mortgage costs by 29 percent and overall ownership costs by 20 percent, according to the Harvard Joint Center of Housing Studies.

Gain more insights in the latest U.S. Multifamily Outlook from Yardi Matrix.

Yardi Matrix offers the industry’s most comprehensive market intelligence tool for investment professionals, equity investors, lenders and property managers who underwrite and manage investments in commercial real estate. Yardi Matrix covers multifamily, student housing, industrial, office and self storage property types. Email matrix@yardi.com, call (480) 663-1149 or visit yardimatrix.com to learn more.

About Yardi

Yardi® develops industry-leading software for all types and sizes of real estate companies across the world. With over 8,500 employees, Yardi is working with our clients to drive significant innovation in the real estate industry. For more information on how Yardi is Energized for Tomorrow, visit yardi.com.

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SOURCE Yardi