Multifamily rent growth continues to buck the seasonal norms, with the average U.S. asking rent increasing $10 in February to a record-high $1,628, reported Yardi Matrix. Year-over-year rent growth increased 15.4% last month, a new peak and up a full percentage point from January.
Of the top 30 metros tracked by Yardi Matrix, 90% saw double-digit, year-over-year rent jumps. Miami tops the list, with a 27% increase in year-over-year rents through February, followed by Tampa and Orlando, Florida; Phoenix; and Las Vegas. Outlier markets also showed significant growth, with San Francisco seeing a 9% increase and Kansas City, Missouri, experiencing an 8.1% bump.
According to Yardi Matrix, the demand that created last year’s rent growth has not been satisfied, with national occupancy rates up 120 basis points year over year. In January 2021, occupancy rates were 95% or higher in only 13 of Yardi Matrix’s top 30 markets; however, one year later, only two are below that level. Occupancy growth is strong in the Sun Belt markets in Florida and Texas, but also in gateway markets that lost renters during the pandemic.
Even as office usage continues a slow recovery, Yardi Matrix points to signs that young workers are returning to city centers. New York had the biggest increase in occupancy of the top 30 markets, up 2.9% year over year and leading to 17.6% growth in asking rents. San Jose, California, and Chicago also saw upticks.
“Rent growth is likely to start decelerating soon relative to the big increases that began in March 2021, but demand shows little sign of slowing,” said Yardi Matrix analysts.
On a month-to-month basis, U.S. asking rents increased 0.6% in February, the same amount as the previous month. While February is typically at the end of the winter seasonal slowdown, the monthly growth was much higher than normal. The largest increase in rents in that month since 2015 has been $4, reported Yardi Matrix.
February’s month-over-month gains were led by Miami, 1.5%; Orlando, 1.1%; and Orange County, California, and Dallas, both 1%. The lowest increases were seen in the Twin Cities, 0.2%; and Baltimore, 0.1%.On the single-family rental side, asking rent grew exponentially, increasing 14.9% year over year. Asking rents jumped 20% or more in seven markets, led by Orlando at 53.5%; Miami, 36.5%; Tampa, 27.6%; and Toledo, Ohio, 21.7%.
“Fundamentals continue to be healthy in the single-family rental sector, prompting asking rents to soar on par with multifamily,” stated Yardi Matrix. “Rapidly rising house prices and growing competition from institutional investors have put homeownership out of reach for some potential buyers, while the increasing preference for suburban housing has added to demand for single-family rentals.”
