February Rent Growth Hits Record Low

Although the year-over-year rate of 2.7 percent was close to the long-term average, last month's growth was the weakest seasonal gain in the past seven years.


Year-over-year rent growth

U.S. multifamily rents barely changed within the last 30 days, according to Yardi Matrix’s monthly survey of 121 markets. Rents rose $1 to $1,364, an increase of 2.7 percent year-over-year through February. Down 10 basis points from the previous month, February’s growth was the weakest seasonal gain since the recovery started. According to the report, its been seven years since rents had increased any less than the current amount.

In terms of metro performance, Orlando has risen to the top position with a 7 percent year-over-year growth, outranking Sacramento’s rent growth of 6.8 percent, which places it second for the first time since June 2016. According to the report, Orlando has continued to benefit from strong job growth, increased migration in the wake of Hurricane Maria and a warm climate that doesn’t seem to suffer from seasonal rental declines. Year-over-year job growth as of December was 2.9 percent, helping keep rent increases high even though supply grew 3.1 percent in 2017. Rounding out the top five for rent growth performance were Las Vegas with an increase of 5.8 percent, the Inland Empire raising 4.4 percent and Tampa with rents up by 4 percent.

The new tax law may provide a boost for apartment demand, with it reducing some of the tax benefits of homeowners, especially in states with high single-family home prices. Due to this, rent growth may start to pick up. On the other hand, there are still concerns in regards to property fundamentals and economic uncertainty, with interest rates continuing to rise amid worries about inflation, as well as the rush to implement tariffs on steel and aluminum threatening to cancel the business confidence boost provided by the regulatory relief and corporate tax cuts that are going into effect this year.

To read the full report, visit the Yardi Matrix website.

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