National Multifamily Report – September 2021

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.

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