2021 Rent Growth

New High Watermark for Rents in December

Rents rose another $2 in December, to $1,594, a new record. Overall, 2021 was a year of records for the U.S. multifamily market, according to Yardi Matrix’s survey: The annual rent growth of 13.5 percent was more than double any previous year, and apartment absorption counted nearly 600,000 units, which is roughly 50 percent more than the previous annual high, set in 2015. The single-family rental market continued to overperform the multifamily sector.

Throughout 2021, the average U.S. asking rent gained $190 and 2022 is forecasted to bring further gains in the multifamily market, at least by historical standards, but at a moderated pace, close to 5 percent annual increases. Possible headwinds include inflation and a new wave of COVID-19 cases.

—Posted on Jan. 26, 2022

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Strong Rents Rise Some in November

The U.S. multifamily market maintained a healthy performance, according to Yardi Matrix’s November survey, sustained by robust demand and steady economic conditions. But rent growth has finally began softening, the average asking rent inching up by “just” $4 in November, to $1,590. This slight uptick translates into a 13.5 percent year-over-year increase through November. Meanwhile, the occupancy rate in stabilized properties rose 1.4 percent in the 12 months ending in October, to 96.1 percent. The single-family rental market maintained its superiority to the multifamily industry.

The year 2021 maintained the unprecedented aura triggered by the pandemic: Nearly 590,000 units were absorbed in the 12 months ending in October, and more than 6 million jobs were added year-to-date through November. Inflation concerns intensify, despite wage growth.

—Posted on Dec. 21, 2021

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 Average Rents Rise 13.7% in October

The beginning of the fourth quarter has registered new record growth in national multifamily fundamentals, according to Yardi Matrix’s latest survey: The national average rent rose 13.7 percent year-over-year through October, to a new high of $1,572, while the occupancy rate in stabilized properties rose 1.4 percent in the 12 months ending in September, to 96.1 percent, an all-time high. September also marked the closure of the historical occupancy gap between the two quality segments. Meanwhile, single-family rentals also maintained a robust performance, the average rent rising 14.7 percent on an annual basis.

Since March, the average U.S. asking rent has risen by $179, which is nearly equal to the increase over the previous five years combined. Behind this outstanding growth is demand: Through September, some 475,000 units were absorbed nationally, already surpassing the all-time annual high. Even though office attendance is limited, gateway markets surpassed secondary and tertiary markets in the number of absorbed units, counting 108,000 absorbed units through the past three quarters. However, it’s uncertain for how long this performance will continue, as each of these metros imposes a series of challenges, such as expensive rents, high taxes, crime rates, schools and, more recently, the corporate migration to tech hubs in the South and Southwest and the work-from-home policies.

—Posted on Nov. 22, 2021

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Rent Growth Moderates in September

Multifamily rent growth remained unparalleled, according to Yardi Matrix’s September survey of 140 markets, the national average rent rising 11.4 percent year-over-year through September, to $1,558. Even though on a year-to-date basis rents improved by a hefty 11.1 percent, the month-over-month rent growth points to moderation signs, marking a 1.0 percent increase (+$16), the lowest monthly rate since March 2021. Historically, fall is a slower period for demand, and September is the month when rent growth begins to soften ahead of winter. Even so, occupancy rose another 10 basis points in September to 95.9 percent.

Lifestyle rents continued to lead gains, up 13.4 percent year-over-year, while Renter-by-Necessity rose by 9.5 percent. So far, many renters were able to keep up with the higher rents in the upscale segment, but affordability concerns are likely to resurface if rents continue to increase. As the economy rebounds, the question will be how long the current performance trajectory can continue. Moreover, fundamental long-term issues from 2019, such as affordability, the scarcity of multifamily housing development and the aging Millennial population, will likely reappear, to which a new factor was added by the pandemic: the geographic preference for working and living.

On a month-over-month basis, rents increased 1.0 percent in September, 80-basis-point below August’s rate. Typically, this rate would be a sign of exceptional performance, but at this time in 2021, it marks a significant slowdown—since February, monthly rent gains have been above 1.2 percent every month, and August’s rate was nearly double the one in September. In addition, Seattle, Boston, the Twin Cities and Chicago recorded negative rent performance. Dallas (2.4 percent) and Nashville (2.2 percent) might continue to grow during the fourth quarter, supported by strong employment and migration trends.

Sun Belt tech hubs maintained the leading ranks, with rent growth fueled by accelerated domestic migration and job growth. The top 15 markets for annual rent growth were all in the Sun Belt with Phoenix (22.8 percent), Tampa, Las Vegas and Miami (22.6 percent each) in the top spots. Meanwhile, primary markets San Francisco, New York, Los Angeles, Chicago, Boston and Washington, D.C., ranked near the bottom of the top 30 markets, with year-over-year rent gains between 4 percent and 8 percent. Record increases were posted in Baltimore (11.4 percent) and Philadelphia (9.7 percent). Looking beyond the top 30 markets, Florida secondary markets showed exceptional performance—West Palm Beach (28.8 percent), the Southwest Florida Coast (27.1 percent) and Jacksonville (22.6 percent).

The single-family rental sector continues to outpace multifamily, with nationwide rents rising 14.3 percent year-over-year through September. Occupancy was up 1.2 percent during the period. Mirroring the multifamily sector, Florida markets led in rent growth: Tampa (38.8 percent) and Miami (32.7 percent). Phoenix, Atlanta and Austin completed the top five. On the occupancy side, Texas markets Houston, San Antonio and Austin took the lead. Limited exiting supply and robust demand will likely sustain elevated growth in the sector.

—Posted on Oct. 26, 2021

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August Rents Up Almost Across the Board

The national multifamily market continued its astounding performance in August, with asking rents posting the first-ever double-digit increase in Yardi Matrix’s dataset, up 10.3 percent year-over-year through August to $1,539. According to the August survey, all but two markets had positive year-over-year rent growth, with Queens (-0.5 percent) and Midland-Odessa (-5.5 percent) being the exceptions. August also marked the first month of positive YoY rent growth since the start of the pandemic across all top 30 metros. Tech hub markets remained in the lead: Phoenix (22.0 percent), Tampa (20.2 percent) and Las Vegas (19.2 percent). New York (2.8 percent) and San Francisco (1.4 percent) occupied the bottom positions and have yet to reach pre-pandemic levels.

Lifestyle rents (11.8 percent) continued to outpace the Renter-by-Necessity asset class (8.4 percent). On the occupancy side, the dynamic shifted, with Lifestyle marking a 1.5 percent rise from a year ago to 95.6 percent, while Renter-by-Necessity inched up just 0.5 percent to 95.7 percent. Overall, the occupancy rate increased 90 basis points to 95.6 percent. There are debates whether the end of the eviction moratorium will trigger a wave of evictions, but according to data collected from the National Multifamily Housing Council’s Rent Payment Tracker, in July, 94.9 percent of apartment households made a full or partial rent payment.

Even though gateway markets are rebounding, numbers are slightly misleading, as some of the YoY figures result from comparison to last August, when gateway metros were struggling. Comparing current rents to those in March 2020, five of the seven gateway markets surpassed pre-pandemic levels: Miami (16.2 percent), Boston (7.0 percent), Chicago (6.4 percent), Los Angeles (4.9 percent) and Washington, D.C. (3.9 percent). Miami and Chicago were among the leading metros in occupancy gains, marking increases of 1.7 percent and 1.4 percent. New York (-3.8 percent) and San Francisco (-3.2 percent) have a slower recovery due to companies delaying the return to office due to a Delta variant-generated surge.

On a month-over-month basis, rents rose 1.7 percent in August, with all top 30 metros posting positive rent growth and 26 of them had 1.0 percent growth or higher. Las Vegas (3.3 percent), the Inland Empire and Seattle (both 3.1 percent) registered the highest increases. Kansas City (0.2 percent), San Francisco (0.5 percent) and the Twin Cities (0.7 percent) occupied the bottom ranks. While San Francisco still deals with out-migration and limited supply (3.3 percent of stock delivered in the last 12 months, with the bulk concentrated in the Lifestyle asset class), Kansas City and the Twin Cities are returning to typical growth rates for Midwest cities.

The single-family rental segment continued to outpace multifamily, posting a 13.9 percent YoY rent improvement. All top 30 metros had positive rent growth, and 20 of them had double-digit increases. Tampa (38.4 percent) and Miami (26.7 percent) topped the list, but Orlando (5.9 percent) was second to last. The occupancy rate rose 1.1 percent nationally, with San Antonio (6.7 percent), Indianapolis and Houston (both 5.6 percent) in the lead.

—Posted on Sep. 28, 2021

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Lifestyle Rents Leap in July

The national multifamily market continued to post remarkable performances, with asking rents marking another record increase, up 8.3 percent year-over-year through July, to $1,510. According to Yardi Matrix’s July survey, 50 markets had double-digit rent growth. Gateway metros also posted a steady comeback, with substantial month-over-month gains: San Jose (3.6 percent), Boston (3.2 percent), New York (3.0 percent), Miami (2.7 percent), San Francisco (1.8 percent), Chicago, Washington, D.C. (both 1.5 percent), and Los Angeles (1.2 percent).

Nationally, Lifestyle rent growth (9.5 percent) continued to outpace Renter-by-Necessity growth (7.0 percent). The trend was mirrored by occupancy: In June, the overall occupancy rate in stabilized properties increased by 60 basis points to 95.2 percent, led by Lifestyle (up 1.1 percent), while Renter-by-Necessity rose 0.3 percent. However, the expiration of the federal eviction moratorium at the end of July raises the question of whether evictions are imminent. Phoenix remained the poster child for rent growth, both for Lifestyle assets (20.7 percent) and overall rent (18.9 percent). Tampa (16.4 percent) and Las Vegas (16.1 percent) rounded out the top three.

On a month-over-month basis, rents rose 1.8 percent, with 26 of the top 30 metros posting rent growth of 1.0 percent or greater. San Jose had its best performance since the onset of the health crisis and led all markets with a 3.6 percent rent improvement. Raleigh followed with a 3.5 percent increase. In New York (3.0 percent) and San Francisco (1.8 percent), rent gains were still below their pre-pandemic period, but residents seem to be returning. If the trend continues, rents will likely return to 2019 levels by year’s end. Midwest cities that posted sturdy performance earlier in the health crisis have now fallen to the bottom of the list—Twin Cities (flat rate), Baltimore (0.7 percent), Indianapolis and Kansas City (both 0.8 percent).

Single-family rents maintained the advantage over the multifamily sector, with national rents and occupancy up by 12.8 percent and 1.2 percent YoY. All top 30 metros had positive YoY rent growth and 19 even posted double-digit rent growth. Cleveland (16.7 percent), Columbus (12.7 percent) and Detroit (12.4 percent) marked solid performance over the last year, but Tampa (31.7 percent), Miami (26.3 percent) and Phoenix (24.2 percent) held the top spots on a MoM basis. On the occupancy side, 26 metros posted occupancy gains on an annual basis, with Tampa (3.5 percent) and Miami (3.0 percent) in the lead.

—Posted on Aug. 27, 2021

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Sunbelt Rents Shine in June

Multifamily rent growth has reached unprecedented levels according to Yardi Matrix’s June survey. Asking rents in June increased 6.3 percent over the previous 12 months, to an average of $1,482, the largest year-over-year increase in the history of the dataset. Rents increased nationally by 1.6 percent over the previous month. All of the top 30 markets reported positive month-over-month growth for the third month in a row, and 27 of those also reported positive year-over-year growth. For the first time since 2011, Lifestyle rents (7.2 percent) grew faster than Renter-by-Necessity rents (5.3 percent) on a year over year basis.

Rent growth was bolstered by migration to the Southeast and Southwest markets. Phoenix experienced 17.0 percent rent growth over the last 12 months. Tampa and the Inland Empire both increased 15.1 percent over the same period. Also notable were Las Vegas and Atlanta, which grew by 14.6 and 13.3 percent. These markets were previously seen as lower cost alternatives to gateway metros. According to Yardi Matrix. this level of growth is not sustainable long-term, but the expectation is that above-average growth in these markets will continue for several months.

Double digit rent increases in markets in the Southeast and Southwest mark that their affordability has begun to decline. Phoenix rents rose by an average of $200 through the past 12 months. Much of the migration into the metro came from higher cost locations where residents were used to paying higher rents. This has put more strain on longtime residents causing, them to downsize or find lower cost locations to live.

On a month-over-month basis, Tampa and Phoenix showed the strongest rent growth, both at 2.5 percent. Urban cores showed strong signs of rebounding, with New York and Seattle reporting 1.9 percent monthly rent growth. Chicago and Washington, D.C., followed, at 1.7 percent. Month-over-month Lifestyle rent growth (2.2 percent) is also outpacing the Renter-by-Necessity segment (1.2 percent).

The single-family rental market also showed strong growth. Rents in the sector were up 11.1 percent year-over-year. All of the top 30 metros recorded positive year-over-year rent growth, with 17 posting growth rates in double digits. Markets with the largest rent growth were Tampa (31.3 percent), Phoenix (23.9 percent) and Miami (23.6 percent). Yardi Matrix believes that there is strong demand in the sector, as people are looking for more space. Occupancy was up 1.9 percent in May on a year-over-year basis. 24 of the top 30 metros had flat or increasing occupancy over the same period.

—Posted on Jul. 27, 2021

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Strong Absorption Lifts Rents in May

Positive momentum continued across the national multifamily market, with rent growth back to pre-pandemic levels, up 2.5 percent year-over-year in May, to $1,428. According to Yardi Matrix’s May survey, of the top 30 markets, 22 had positive year-over-year growth rates. On a month-over-month basis, the national average rent rose 0.8 percent, posting the largest increase since June 2015, while all top 30 metros had positive growth, and 90 percent registered gains of 0.5 percent or more.

The best performing metros on a year-over-year basis were the Inland Empire (10.2 percent, the highest rate in the metro’s history), Phoenix (9.6 percent) and Sacramento (8.3 percent). Of all gateway markets, Miami posted the strongest gains, up 6.0 percent. At the opposite end are San Jose (-9.0 percent), New York (-8.8 percent) and San Francisco (-6.7 percent).

All gateway markets showed signs of recovery—New York led all 30 top metros with an average rent growth of 3.4 percent on a month-over-month basis.  Lifestyle rents led growth there, up 4.8 percent. The rebound in the metro is likely driven by the financial sector, with the banking industry mandating that workers return to the office this summer. Slower performances were recorded in Seattle (0.2 percent MoM) and San Francisco (0.3 percent MoM). The lag is attributed to the large concentration of tech workers that are more likely to continue working on a hybrid or fully remote schedule.

During the four months of 2021, almost 120,000 units—0.8% of stock—were absorbed nationally, pointing to one of the best years since the 2008 recession. Dallas (8,200 units absorbed), Miami (5,700), Atlanta (5,400) and Phoenix (4,600) occupied top positions by the number of units absorbed. Absorption based on percentage of stock was highest in Nashville (2.1 percent of stock), Miami, Charlotte and Chicago (all 1.9 percent). At the bottom of the top 30 metros stood the Inland Empire (0.3 percent of stock, or 531 units year-to-date) and Sacramento (0.2 percent of stock, or 209 units). The two metros are relatively affordable compared to other California markets, but robust year-over-year rent increases seem to narrow the gap in the cost of living.

May marked the launch of Yardi Matrix’s data tracking single-family rentals, which comprises more than 90,000 units in 700 communities across the U.S. Rents in the asset class rose by 7.3 percent in May on a year-over-year basis, or by $14, to $1,761 with the Inland Empire (18.3 percent), Phoenix (15.3 percent) and Denver (13.5 percent) topping the list for year-over-year growth. Occupancy marked a 1.5 percent increase in the 12 months ending in April, to 96.6 percent.

—Posted on Jun. 29, 2021

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Gateway Market Rents Turn a Corner in April

The national multifamily market registered the best performance in rent growth since the onset of the pandemic, according to Yardi Matrix’s April survey. Rents rose 1.6 percent to $1,417 on a year-over-year basis in April, which marks a $10 increase in overall rents, an amount last recorded in June 2015. For the first time since the beginning of the health crisis, all top 30 markets had positive month-over-month rent growth, with 24 of them posting rent hikes greater than 0.5 percent. On a year-over-year basis, of the 134 markets surveyed, 117 posted positive rent growth.

Rent growth was positive in all gateway markets on a month-over-month basis, and the rebound in gateway market rents is seen as the trustworthy sign of economic recovery—Miami (1.0 percent), Chicago (0.9 percent), Boston & San Francisco (0.8 percent), New York (0.6 percent), Washington, D.C., (0.2 percent) and Los Angeles (0.1 percent). On a trailing three-month basis, Miami posted a 0.8 percent increase, followed by Chicago (0.5 percent) and Boston (0.4 percent). Rent growth in Washington, D.C. (0.2 percent), New York, San Francisco and Seattle (all 0.1 percent) is expected to strengthen as the summer approaches. On a year-over-year basis, New York (-12.6 percent), San Jose (-10.8 percent) and San Francisco (-7.7 percent) remain at the bottom.

Leading markets for rent growth for the past few years—The Inland Empire (9.4 percent), Sacramento (8.4%) and Phoenix (8.1%)—posted extremely low rates five years ago; over this five-year period, rents hiked by 31 percent in the Inland Empire and by 34 percent in Sacramento and Phoenix. Meanwhile, on a national level, rents rose by 12 percent. Of the six markets that posted negative year-over-year rent growth, Austin (-0.1 percent) had strong month-over-month gains, which will likely turn rent growth positive next month.

The occupancy rate also improved in gateway markets, but properties in the downtown urban cores will likely face a recovery period of up to three years. According to a study of the Yardi Matrix database, one of every 14 multifamily properties has recorded occupancy rate declines of 5 percent or more over the last 12 months. The most significant occupancy drops were in New York, San Jose and Los Angeles. Expected new supply raises some concerns—when coupled with possible scarce demand, it could lengthen the recovery. In San Jose, stock is anticipated to expand by 2.0 percent in 2021 and by 4.2 percent in 2022.

—Posted on May 25, 2021

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Non-CBD Markets Lead Rent Recovery in March

The U.S. multifamily market marked a turning point in March, with multifamily rents rising 0.6 percent year-over-year, or up $6 to $1,407, according to Yardi Matrix’s survey. On a quarter-over-quarter basis, the U.S. average rent appreciated by 0.8 percent, posting one of the strongest quarters in a few years. On a month-over-month basis, rents increased by 0.4 percent, up 20 basis points from February. Of the 134 markets surveyed, 114 had flat or positive year-over-year rent growth. Of the top 30 metros, 19 had flat or positive year-over-year rent growth, and 26 posted flat or positive month-over-month rent performance.

Lower-cost metros in the West continued on an upward trend, sustained by strong demand for housing—the Inland Empire (8.3 percent) Sacramento (7.3 percent) and Phoenix (6.9 percent) led all markets on a year-over-year basis. Limited new supply and robust migration boosted the average rent in Tampa (5.0 percent) and Atlanta (4.7 percent), where inventories expanded by 2.3 percent and 2.5 percent in the 12 months ending in March.

Rents remained on a downward trend in the metros most impacted by remote work and out-migration—New York (-13.6 percent YoY) and San Jose (-12.0 percent)—but even here there are signs of bottoming out. San Jose marked a 0.9 percent increase on a month-over-month basis, pointing to a possible turnaround.

Stock expansion is a big factor in the recovery of many metros. The most completions as a percentage of stock over the last 12 months ending in March were registered in Austin (4.4 percent YoY), Raleigh (3.9 percent), Twin Cities (3.9 percent) and Denver (3.8 percent). Rents appreciated by 0.4 percent and 0.1 percent in the Twin Cities and Denver on a year-over-year basis. Most gateway markets reported limited completions but have robust construction pipelines: Miami led with 14.6 percent of existing stock under construction, followed by San Francisco (8.2 percent) and Los Angeles (7.8 percent).

In Raleigh, the robust stock expansion caused rents to decline 0.9 percent month-over-month, but it could be just a one-month dip as the metro is sustained by strong economic fundamentals. On a year-over-year basis, the average marked an uptick of 0.5 percent. In Austin, inventory additions kept rent growth struggling since the onset of the pandemic, but in March, rents appreciated by 0.9 percent on a month-over-month basis, posting the strongest performance over the past year.

—Posted on Apr. 26, 2021

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Average Rents Up 20% in February

The decline of multifamily rents continued on a softening trend, as signs of recovery become clearer according to Yardi Matrix’s monthly survey of 133 markets. Even though the national rent growth was still negative in February—with year-over-year rents down 0.1 percent—on a month-over-month basis, the average rent in February appreciated by 20 basis points, up $3 to $1,399. If market conditions hold, February may well be the last month we see a national decline in rents. On a year-over-year basis, 16 of the top 30 markets remained flat or marked negative rent performance, posting a progressively moderating rate. On a month-over-month basis, 111 of the 133 surveyed markets had positive rent growth.

Lower-cost markets continued to outperform gateway markets—rents in New York, San Jose and San Francisco declined by 9.9 percent on a year-over-year basis, but even here month-over-month declines have moderated, hovering between -0.4 and -0.8 percent. Seattle (-7.7 percent YoY, -0.7 percent MoM) continued to struggle. Declines in gateway markets affected both Lifestyle and Renter-by-Necessity assets.

The Inland Empire (7.6 percent) and Sacramento (6.4 percent) maintained top positions for rent growth on a year-over-year basis through February. The two were also in the top three for occupancy growth, up 2.2 percent and 1.2 percent on a year-over-year basis as of January. Performance was sustained by strong migration and limited supply, of just 1.6 percent of total stock in the 12-months  ending in February. Midwestern markets like Indianapolis (rents up 3.6 percent year-over-year) and Kansas City (up 2.3 percent) posted favorable performance on a year-over-year basis thanks to their affordability and limited new supply. On a month-over-month basis, of the top 30 markets, 23 had positive rent growth, with Phoenix (0.9 percent), Miami (0.8 percent) and Tampa (0.7 percent) posting the best rent gains.

The passage of a COVID relief bill in December 2020 boosted economic activity, and the recent $1.9 trillion stimulus bill is anticipated to galvanize the economy further, but the issue of high inflation is lurking. With spring marking the peak of leasing season, Yardi Matrix expects month-over-month rents to appreciate and even accelerate as the economy recovers.

—Posted on Mar. 24, 2021

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Rents Continued to Slide in January

The decline of multifamily rents showed signs of softening, according to Yardi Matrix’s monthly report of 130 markets. Rents dropped 0.2 percent in January on a year-over-year basis, while on a month-over-month basis, the average rent marked a 20 basis-point rise, or an increase of $3 to $1,392. Although the average national rent is improving, of the top 30 markets, 16 posted declines.

In some gateway markets, rents continued their descent, including New York (down 12.2 percent year-over-year), San Francisco (-9.8 percent), Boston (-3.8 percent) and Los Angeles (-3.0 percent); other gateway markets show signs of bottoming out, posting increases in the month-over-month rents, such as San Jose, where rents improved 0.9 percent, but were down 13.0 percent year-over-year. The best performers continued to be the Inland Empire (up 7.4 percent year-over-year), Sacramento (up 6.3 percent) and Indianapolis (up 4.5 percent), due to their location near dense and high-cost markets.

Rents in the Lifestyle segment rose by 0.1 percent on a month-over-month basis in January, marking the first positive movement in the segment since February 2020. Meanwhile, Renter-by-Necessity rents continued rising, up by 0.3 percent.

Job loss or growth has not been directly proportional with declines or gains in rents and occupancy across metros, instead, a correlation to migration trends and living costs has emerged. Markets with the highest percentage of jobs in “at-risk employment sectors”—which included Las Vegas and some of the Florida markets—withstood the pandemic’s impacts aided by robust in-migration from higher-cost states like California and New York. Metros with the smallest percentage of jobs in at-risk employment sectors, like New York and Northern New Jersey, marked steep rent declines.

—Posted on Feb. 26, 2021