Multifamily rents in the U.S. performed strongly in April, rising $4 to $1,377, according to a survey of 127 markets by Yardi Matrix.
Rents have increased by $10 in the last two months, a year-over-year gain of 2.4% and the market’s best performance since last spring.
The gain conforms with the multifamily market’s historically strong springtime performance, allaying concerns that surging deliveries from summer 2017 to February 2018 would dampen growth.
Rent growth should continue despite headwinds
The healthy seasonal gains are a good sign that rent growth will remain resilient despite the headwinds faced by the market, particularly the peaking supply pipeline that has produced deceleration in some metros, according to Yardi Matrix.
“The big picture is that even though the occupancy rate is dropping slowly closer to the historical average, the market is in a healthy position for the long term,” Yardi Matrix wrote in the report.
“Demand is expected to remain high, while overall housing stock is growing at roughly the same number as new households.
Multifamily supply out of skew in some metros
“Multifamily supply is out of skew in some metros and submarkets, either because the total number of units is too great or the type of supply is not balanced with the demand for units affordable to working families.
“In those areas, rents will flatten or even drop slightly. By and large, however, signs suggest rents will keep growing moderately or better,” the report says.
Highlights of the rent growth report
- Despite the challenge faced by supply growth and the deceleration in rents from the top of the cycle, job growth continues apace at more than 180,000 per month and the economy is still strong.
- Although occupancy rates are under pressure, demand for multifamily units remains robust in most markets, which means rents still have room for growth.
- Metros with declining occupancy rates have the weakest rent growth metrics
- The Renter-by-Necessity (3.0%) market maintained its 140-basis-point rent growth spread compared to Lifestyle units (1.6%), as demand remains high for affordable housing.
About Yardi Matrix
Yardi Matrix, formerly known as Pierce-Eislen, Inc.®, was founded in March, 2000, and acquired in July 2013 by Yardi Systems, Inc., a Santa Barbara, California software company focused on commercial real estate industry applications. The Yardi Matrix apartment information service is a high-performance system with the sole function of supporting the commercial apartment industry’s dominant participants. The company’s services monitor the 50+ unit apartment universe from the property level to the submarket/market level in a form unique within the commercial apartment information industry.