National Multifamily Report – January 2024

The average multifamily asking rent was $1,710 in January, up 0.5 percent year-over-year.

The U.S. multifamily market was stable at the start of 2024, with demand fueled by a strong economy and job growth, and immigration inflows in large urban markets, according to Yardi Matrix’s latest survey of 140 markets. The average U.S. asking rent remained unchanged at $1,710 in January, up 0.5 percent year-over-year increase. Single-family rentals outperformed multifamily, with the average rent up $2 in January to $2,130, for a 1.5 percent year-over-year increase.

On a year-over-year basis through January, rent growth remained highest in the Northeast and Midwest, led by New York (5.5 percent), New Jersey (4.4 percent), Columbus (4.2 percent), Kansas City (3.4 percent) and Indianapolis (3.0 percent). Of Matrix’s top 30 metros, four had the average asking rent decline by 3.0 percent or more, led by Austin (-6.0 percent). Occupancy stood at 94.6 percent in December, posting a 50-basis-point decline year-over-year and 160 basis points lower than the cycle’s peak. The rate was up only in Seattle (0.1 percent) and remained flat in San Francisco and New York.

On a monthly basis, national rents were flat in January. Renter-by-Necessity rents inched up 0.1 percent and remained unchanged in the Lifestyle segment. Rent growth was negative in 12 of the top 30 metros in the Lifestyle segment and 15 in the RBN component. Steep declines across segments were marked in Austin (down 0.7 percent in both Lifestyle and RBN), and Detroit (down 1.1 percent in Lifestyle and 0.7 percent in RBN). At the other side of the spectrum, 17 of Matrix’s top 30 metros recorded monthly gains in overall rent, led by Columbus (0.8 percent), Indianapolis (0.6 percent) and the Twin Cities (0.5 percent). San Diego posted the largest decline, down 1.0 percent.

Supply weighs heavily in rent growth performance

Rent growth is set to remain tepid in 2024, primarily due to the high volume of deliveries expected to come online. Yardi Matrix forecasts a record 540,000 units will be delivered in 2024 and another 460,000 units in 2025. Multifamily starts peaked in 2022, when 678,000 units broke ground, then dwindled in the second half of 2023, ending that year around the 500,000-mark. Starts will likely decline further in 2024, as debt capital grows more expensive. However, affordable housing and SFRs are increasing their share of the pipeline. The former totaled 67,000 starts in 2023 (a number expected to rise as year-end starts are tallied), which is more than three times the totals reported in 2013 and 2013. Similarly, SFR communities with 50-plus units rose to 32,600 in 2022, ten times the 2013 and 2014 volumes.

New supply is unevenly spread, hence rent growth will vary by location. High deliveries are expected in fast-growing tertiary markets such as Huntsville, Al., Port St. Lucie, Fla., Colorado Springs, Boise and Idaho, and secondary markets such as Austin, Charlotte, Denver, Phoenix and Nashville. While absorption remained strong in Sun Belt and Western metros, rent growth will be limited. Northeastern and Midwestern markets will experience the opposite scenario, as demand is moderately positive, occupancy stable, and rents are rising as supply is weak.

Mirroring asking rent performance, rent growth for renewal leases is also decelerating. The rate was up 5.1 percent year-over-year in November, a 10-basis-point drop from October. The highest renewal rent growth rates were registered in Kansas City (9.5 percent), Miami (8.9 percent) and Portland (7.8 percent). Due to substantial delivery pipelines, two metros posted negative asking rents and weak renewal rent growth—Phoenix (0.4 percent renewal rent) and Austin (0.6 percent). Meanwhile, the national lease renewal rate stood at 66.6 percent in November. The highest rate was registered in New Jersey (81.9 percent) and the lowest in Los Angeles (48.6 percent).

Asking rents for single-family rentals rose $2 to $2,130, up 1.5 percent year-over-year, 20 basis points above the December rate. Occupancy rates in December were up 10 basis points year-over-year, but remained unchanged from the previous month, at 95.7 percent. Institutional investors in the SFR segment slowed their activity due to rising interest rates and low for-sale home inventory. However, Blackstone, a private equity with more than 17,000 SFRs in the U.S., showed high confidence in the sector by agreeing to acquire Tricon Residential, a REIT that owns 36,000 SFRs in the U.S. and Canada. Blackstone announced plans to complete Tricon’s development pipeline, which consists of $1 billion of BTR homes in the U.S. and $2.5 billion of apartments in Canada.

Read the full Yardi Matrix multifamily real estate report.

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