Multifamily rents aren’t seeing a slowdown yet, according to the latest Yardi Matrix Multifamily Report. The average U.S. asking rate rose $15 in April—$30 over the past two months and $50 year to date—to an all-time high of $1,659. Year-over-year growth, which moderated by 50 basis points, still remains high at 14.3%.
“Although there are a few weak spots, multifamily demand and rent growth remain incredibly strong throughout the country,” stated Yardi Matrix analysts in the report. “Of our top 30 metros, rent growth was up 8.8% over the last year in all but one.”
However, Yardi Matrix reported that it does anticipate deceleration in the future.
“Certainly, deceleration will happen, and there are warning signs on the horizon,” stated the report. “The U.S. economy unexpectedly contracted by 1.4% in the first quarter of 2022, owing to issues that include surging inflation, ongoing supply chain issues, shrinking business inventories, and the omicron outbreak in January. The Federal Reserve is expected to maintain its tightening policies that could further dampen growth.”
Florida and Southwest markets continue to be at the top of the year-over-year rankings. Miami led the way in April with a 24.6% year-over-year increase, down 1.7 percentage points from March. Even markets with the lowest growth—Twin Cities at 4.7%; Kansas City, Missouri, and San Francisco at 8.8%; and Baltimore at 9.3%—are still seeing strong performance.
Demand is cooling off slightly in the Sun Belt and the West. Year over year, occupancy rates decreased in four metros in March, led by Las Vegas at -0.8%. Phoenix and Sacramento, California, both saw declines of -0.5%, and California’s Inland Empire saw a -0.4% drop. According to Yardi Matrix, this is a possible sign that in-migration is weakening. However, New York and San Jose, which are recovering from pandemic downturns, experienced gains of 2.4%.
Month over month, asking rents nationally increased 0.9% in April, the same increase as the prior month. Last month’s gains were led by metros in the Acela Corridor and the Sun Belt, with Boston seeing a 2% month-over-month increase, followed by Raleigh, North Carolina, at 1.8%; Philadelphia at 1.6%; Tampa, Florida, at 1.4%; and New York at 1.3%.
Rents for single-family rentals also continue to increase, reaching an all-time record of $2,018 in April. Three metros experienced growth over 20%: Orlando, Florida, at 50.3%, Miami at 31.7%, and Las Vegas at 20.3%.
“Rapidly rising house prices and increasing interest rates are keeping homeownership out of reach for some potential buyers, while others are losing bids to the growing competition from institutional investors,” said the report. “The increasing preference for suburban housing has added to demand for single-family rentals.”
