The national average multifamily rent rose by $23 in June, up to $1,482—shattering growth records for Yardi Matrix’s Multifamily National Report. Year-over-year rent growth also rose to the highest level in the history of the dataset, up 6.3% in June.
Yardi notes that these increases reflect growth in rents for unleased apartments; increases are smaller for tenants rolling over existing leases.
Out of the top 30 markets, 27 experienced positive rent growth on a year-over-year basis, with nine racing into double-digit growth. Phoenix topped the list at 17%, followed by Tampa, Florida, and California's Inland Empire, both at 15.1%. (San Francisco, New York, and San Jose, California, are the only top 30 markets where rent growth remains negative.) Broken down by product category, luxury Lifestyle rents rose by 7.2% YOY—outpacing Renter-by-Necessity rents (5.8%) for the first time since 2011.
Rents have risen 1.6% on a month-to-month basis at the national level, and all of the top 30 metros have experienced positive month-over-month rent growth. Tampa and Phoenix had the strongest growth at 2.5%, followed by Austin, Texas, at 2.4% and Miami at 2.3%. Gateway markets are showing signs of a rebound, with New York and Seattle up 1.9% month to month, and Chicago and Washington, D.C., up 1.7%.
Yardi attributes June's spike in rent growth to a perfect storm of economic conditions. Stimulus checks, enhanced unemployment benefits, and more than $45 billion in direct renter payments helped support the multifamily industry and its collections across the country. Household savings are also up by more than $2.5 trillion, and the hot for-sale housing market has forced many would-be buyers back into the rental market.
Last but not least is the lack of new housing supply—while the U.S. is on track to build 1.5 million units in 2021, according to the Census Bureau, this will not be sufficient to satisfy demand. Overall, while Yardi does not believe rent growth will continue “indefinitely” at this level, above-average growth is likely to persist for some time.
Phoenix, Tampa, the Inland Empire, and Las Vegas have stood out for Yardi as hot spots for rent growth over the past year. Phoenix has become a “poster child for migration,” Yardi says, with new residents moving from higher-cost areas across the country, but especially California.
Limited new supply has contributed to rapid price spikes, with rents in Phoenix up by $200 in the past year. While new residents from higher-cost locations are accustomed to higher rents, Yardi notes that longtime residents may not be able to keep up with the increases to the cost of living. Tampa, Las Vegas, and the Inland Empire are seeing similar trends, wherein new residents can afford large price increases while longtime residents cannot.
Rents for homes in single-family build-to-rent communities rose 11.1% YOY in June, owing to strong demand and a competitive for-sale housing market. All of the top 30 single-family rental markets showed positive YOY rent growth, with double-digit growth in 17 out of 30 markets. Tampa showed the strongest rent growth at 31.3% YOY, followed by Phoenix at 23.9%—matching the strongest markets for conventional multifamily rent growth.
