2021 Rent Growth
- Mar 24, 2021
Year-over-year, all asset classes
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 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
Year-over-year, all asset classes
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