Demand is bolstered by strong consumer balance sheets
The multifamily market has remained resilient in the face of economic challenges, as solid demand kept rents rising but at a slower pace than in previous years.
The average asking rent increased $5 in April to $1,709, according to the latest National Multifamily Report from Yardi Matrix. Year over year, rent growth slowed to 3.2%, down 80 basis points from March.
“Demand is boosted by the tight job market and strong consumer balance sheets, although the question is how much longer those conditions will persist,” Yardi wrote in the report. “First quarter GDP growth was 1.1%, as consumer spending outweighed waning business inventories. However, economic growth is likely to ebb in coming quarters due to factors including a slowdown in housing sales and construction from higher interest rates, dwindling post-pandemic consumer savings, a squeeze on credit as banks try to de-risk loan portfolios, and the reduction of the Federal Reserve’s balance sheet.”
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The national occupancy rate hovered at 95% in March, an indication that demand is holding up despite recession fears. Yardi still expects a recession later this year, as well as moderate rent growth.
“Rent growth is broadly positive nationally, but regional differences are emerging. High-demand Sun Belt metros are feeling the impact of reduced affordability and robust deliveries, while primary metros have less supply growth and some benefit from rebounding immigration,” the report said.
Annual rent growth is led by metros in the Midwest and Northeast, including Indianapolis (7.7%), Kansas City (6.4%), New York (6.2%), Boston (5.2%), and Chicago (5.0%)
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