Multifamily rents fell by 0.1% year over year in February 2021, up 10 basis points from last month’s 0.2% YOY decline, according to Yardi Matrix’s latest Multifamily National Report. Despite ongoing negative growth, year-over-year rents in the national report have trended toward positive over the past several months—and could turn positive by next month if the trend continues.
The national average multifamily rent rose by 0.2% from January to February, or $3, to $1,399. This marks the ninth consecutive month where rents have either increased or remained flat.
Gateway markets are continuing to struggle—but not as much as they have throughout most of the pandemic. Sixteen out of the top 30 markets remained flat or experienced negative rent growth year over year. Rents in New York, San Jose, and San Francisco are still down a tremendous amount on a year-over-year basis, but the markets’ month-over-month declines have begun to taper off.
California's Inland Empire has experienced the strongest YOY rent growth at 7.6%, followed by Sacramento at 6.4%. Both are also strong markets for occupancy growth—the Inland Empire’s occupancy rose 2.2% YOY in January, while Sacramento’s rose 1.2% over the same period. (Occupancy data is current to the previous month.)
Outside the top 30, Yardi saw a large increase in rents rising month-over-month in secondary and tertiary markets. Out of the 133 markets in the provider’s survey, 111 showed positive month-over-month rent growth. Indianapolis led the Midwest with 3.6% rent growth, followed by Kansas City, Missouri, at 2.3%.Out of the top 30 markets, 23 posted positive month-over-month rent growth. Yardi expects this trend to continue as the traditional leasing season begins. Phoenix showed the highest rent growth at 0.9%, followed by Miami at 0.8%. The bottom markets included San Francisco at -0.8% and Seattle at -0.7%.
The December 2020 COVID relief bill boosted economic activity in January and February, and Yardi expects another boost from the recently passed $1.9 trillion stimulus bill, including $1,400 checks for most Americans, aid to schools and colleges, rent relief, and funding for vaccinations. Many economists anticipate 6% GDP growth for 2021, though inflation remains a concern, according to Yardi.
Yardi forecasts that most markets will have positive rent growth by the end of 2021—except for select gateway markets. A permanent shift to remote work could hinder these markets’ recovery, as workers may choose a lower-cost market over a costly urban core if they do not need to commute. Yardi anticipates that college graduates could “backfill” some of this lost population, and that tertiary metros will likely benefit from an influx of remote workers looking for lower-cost housing.
