The U.S. multifamily market has showcased strong growth in June, with unprecedented rent increases registered across the entire country. Asking rents increased by a substantial 6.3 percent on an annual basis to $1,482, representing the largest year-over-year rent growth recorded by Yardi Matrix.
While gateway markets started to rebound, rent growth was led by lower-cost metros that have attracted a large number of residents amid the pandemic. Due to people coming from higher-cost cities and increased personal savings, Lifestyle rents outpaced Renter-by-Necessity rates for the first time since 2011. Lifestyle rents grew 7.2 percent, while Renter-by-Necessity rates recorded a 5.8 percent uptick, year-over-year in June.
The list below highlights the top five markets with the highest rent growth on a year-over-year basis through June, based on Yardi Matrix data.
|Rank||Market||Rent June – 2021||YoY Rent Change -June 2021||Rent Change on a T3 Basis|
Source: Yardi Matrix
5. Inland Empire
Thanks to its proximity to Los Angeles, the Inland Empire’s multifamily market was able to benefit from the accelerated migration trends fueled by the pandemic. With an existing housing stock of over 157,000 units, the overall occupancy rate in the Inland Empire reached 98.1 percent as of June, up 1.5 percent year-over-year.
The metro recorded historic rent growth, up 15.1 percent on a year-over-year basis through June, when the average rent was $1,843, above the $1,482 national figure. On a trailing three-month basis, rents rose 1.7 percent.
Tampa has been steadily expanding over the past decade, gaining more than 460,700 residents between 2010 and 2020, according to preliminary data from the U.S. Census Bureau. The metro has also become an attractive destination for people looking to relocate from gateway cities.
As a result, Tampa’s rental market recorded strong growth in recent months. Rents increased 15.1 percent year-over-year through June, and 2.3 percent on a trailing three-month basis. The average rent stood at $1,484, while rates in the Lifestyle category reached $1,737, up $255 year-over-year.
3. Spokane, Wash.
Spokane’s strong rental market is also fueled by people relocating from expensive West Coast markets, a relatively healthy economy and a low housing supply. Over the past decade, developers delivered roughly 9,500 units in Spokane, with the metro recording a cycle peak in 2018 when a total of 1,420 units came online.
The past decade’s efforts to expand Spokane’s housing supply, however, might not be enough to satisfy future housing needs. According to the Spokane Regional Housing Needs Summit report, Spokane County’s housing market was underbuilt by nearly 32,000 units in the 2010s, while the region is expected to add 48,000 residents by 2030.
With occupancy rates hovering at 98.2 percent in the metro, rents increased 16 percent year-over-year through June, significantly above the 6.3 percent national rate. As of June, Spokane rents were also up 2.8 percent on a trailing three-month basis. The average rent stood at $1,204, slightly lower than the $1,482 U.S. figure.
Phoenix has become a number one destination for people and businesses relocating from California gateway markets, driving growth across all sectors. The metro gained 132,900 jobs in the 12 months ending in May, with the jobless rate hovering at 6.7 percent, below the 13 percent national figure, according to preliminary data by the U.S. Bureau of Labor Statistics.
Amid strong economic expansion, limited supply and high demand, Phoenix recorded a spike in rental prices. Rents in the valley rose 17 percent year-over-year through June, reaching $1,418. The accelerated growth in rents is even more noticeable when comparing the Lifestyle increases to the Renter-by-Necessity growth. Lifestyle rents in Phoenix grew almost $265 on an annual basis, reaching $1,653, while Renter-by-Necessity rents recorded a $145 uptick over the same period, reaching $1,153.
1. Boise, Idaho
Boise enjoyed strong economic expansion prior to the pandemic, with unemployment at an all-time low and jobs at an all-time high. While the pandemic dampened this growth, Boise is one of the leading markets in the country for rebounding jobs. In May, the metro gained some 29,200 jobs, with the unemployment rate reaching 2.9 percent, down 40 basis points over the previous month, according to BLS data.
Following a decade with roughly 8,000 multifamily unit deliveries, development activity has picked up the pace in Boise. The metro currently has more than 3,300 units under construction and another 3,000 in the planning phases. However, as supply still lags demand, rents surged 20.7 percent year-over-year through June. On a trailing three-month basis, rents grew 2.9 percent as of June.