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Multifamily: Negative Rent Growth Popping Up in Certain Metros

Multifamily: Negative Rent Growth Popping Up in Certain Metros

Multifamily: Negative Rent Growth Popping Up in Certain Metros

Multifamily: Negative Rent Growth Popping Up in Certain Metros


Through much of 2021, the multifamily headlines boasted double-digit rent growth, both nationally and in many metros throughout the United States. Fast forwarding a couple of years later, and the news involves a rent-growth slow-down. According to recent reports from Yardi Matrix and Apartment List, rent growth is now in the single-digit range, and turning negative in some metro areas.

Both the Yardi Matrix National Multifamily Report (May 2023) and the Apartment List Rent Report (June 2023) indicated that national rent growth is at its lowest level since March 2021. Both reports pointed to new supply and weakening demand as the culprits, especially in metros that once reported much higher rent growth than the historical norm. What’s going on now is “essentially the opposite of what transpired in 2021-2022, when rents soared,” Rob Warnock, senior research associate at Apartment List told Connect CRE.

This might be alarming, considering that spring and early summer are typically when rental activity increases. But Yardi Matrix Manager, Business Intelligence Doug Ressler explained the glass-half-full scenario. “New supply is now beginning to see rent-up to meet the growing demand, versus supply imbalance,” he told Connect CRE.

Rob Warnock

Additionally, Warnock offered context behind negative rent growth. “Even in the area where YoY rents have fallen the most, they’re still 30% higher than they were pre-pandemic,” he said. “So rent prices are still historically high.”

Occupancy Remains Stable

Meanwhile, occupancy stood at 95.0% (Yardi Matrix) and 93.0% (Apartment List). According to the Yardi Matrix report, the still-high occupancy suggests “resiliency of demand in the face of broader economic uncertainty,” while also noting that year-over-year occupancy rates fell in all but one of the top 30 markets.

According to Apartment List, the current occupancy rate surpassed the pre-pandemic rate. But with more units coming online, “some property owners may start struggling to fill vacancies for the first time since the early stages of the pandemic,” according to the report.

The Outlook

Doug Ressler

Both Ressler and Warnock believe that year-over-year rent growth will continue to decline as new supply is delivered and absorbed.

While slowing rent growth and increasing supply could help increase affordability in the near term, it could also prove problematic for apartment owners and managers. “Decelerating rent growth and inflationary expenses are increasing pressure, which will lead to pressure on NOIs,” Ressler explained. “The industry is under revenue and expense pressures.”

Warnock indicated that on a national basis, year-over-year rent growth could flip negative as early as this summer “and remain there through the winter as the rental market reaches its lowest-demand months.”


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