Average U.S. multifamily rents rose $2 in August to $1,412, yet another all-time high, according to a survey of 127 markets by Yardi Matrix.
“The multifamily market … shows no signs of being at the end of its cycle,” the report says, noting that the monthly average was the seventh consecutive all-time high.
- Rents increased 3.1% nationwide in August, as the multifamily industry maintains consistent growth. Fundamentals appear to be in balance, as moderate rent appreciation, steady occupancy rates and new deliveries are supported by strong demand for apartments.
- Orlando (6.7%) once again led the top 30 metros on a year-over-year basis, while other popular retirement metros Las Vegas (5.7%), Phoenix (5.3%), and Tampa (4.8%), were also among the top performers. The Inland Empire (5.4%) ranked third overall, as Los Angeles residents continue to migrate eastward in search of more affordable housing.
- Renter By Necessity (3.5%) continues to outperform Lifestyle (2.4%) as new supply hinders rent growth of luxury units.
No deceleration as multifamily rents and growth show no signs of slowing
“How much time is left in the commercial real estate cycle is a topic of much discussion,” the Yardi Matrix report says.
“There are few modern examples of cycles that last more than eight years, so every quarter the market goes without a downturn seems to be tempting fate in the eyes of many observers.
“The multifamily market, however, shows no signs of nearing the end of its cycle. While it might be overstating the case to say that the sector is picking up steam, August rent data indicates that deceleration no longer seems to be an accurate term for the state of the market,” the report says.
“The numbers indicate that the multifamily market is being driven by strong fundamental metrics. The economy is on track to add about 2.5 million jobs in 2018 amid low unemployment and slowly increasing wage growth. Combined with other factors, such as the secular increase in the number of renter-age young adults and urban migration, the growth of new renter households seems poised to continue,” according to the report.
- Secondary markets in the South and West continue to lead rent growth, but gains are widespread. Of the 30 metros covered by our survey, 21 (70%) recorded year-overyear increases of more than 1.5%.
- The resiliency of the market is demonstrated by the rebound in metros that saw declining occupancy rates and flagging rent gains at the beginning of 2018.
- The apparent takeaway: Supply pressures may be temporary, and markets with strong economic performance will bounce back as long as demand holds.
To learn more about Yardi® Matrix and subscribing, please visit www.yardimatrix.com or call Ron Brock, Jr., at 480-663-1149 x2404.