2023 Rent Update: Midsize Markets Grow, Pandemic Boomtowns Struggle

Rents are behaving as expected so far this year, Yardi Matrix says in a special Multifamily Rent Forecast Update, with some rent deceleration but mid-market is strong

Rents are behaving as expected so far this year, Yardi Matrix says in a special Multifamily Rent Forecast Update, with some rent deceleration happening in two geographic areas.

Yardi Matrix says the decline in asking rents was driven by actual decreases in asking rents in markets that mostly fall into two categories:

  • Florida markets that saw unbelievable growth during the pandemic are now facing major affordability problems. Five of the 10 worst-performing markets were in Florida – Southwest Florida Coast, Miami, Orlando, Jacksonville and West Palm Beach.
  • Some California markets are still struggling to find their post-pandemic footing. Of the remaining markets that saw month-over-month declines, six were in California – as Metro Los Angeles, Sacramento, East Los Angeles County, and the Bay Area: East Bay, Orange County, and the Inland Empire (Riverside).

“While there will always be month-to-month fluctuations and outlier markets, rents so far this year are behaving essentially as expected: Midsize markets, especially in the Midwest and Northeast, are seeing very strong growth in asking rents, while Western, Southwestern and many pandemic boomtown markets are struggling to regain (or gain) traction after the seasonal slowdown last winter,” writes Andrew Semmes, Senior Research Analyst for Yardi Matrix, in the bulletin.

Some struggling markets could still turn around later this year, but there are issues to watch. While the job market is strong, consumer sentiment remains down despite some positive economic news. With pandemic cash gone and student loan payments upcoming due to the recent Supreme Court decision, some renters could be left in a tighter financial situation than they expected.

Some markets will perform

“We have raised our expectations for many midsize markets throughout the Midwest, Northeast and parts of the South,” the report says.

“As affordability continues to be a concern across the country and economic uncertainty prevails, these smaller markets will continue to be more attractive, as they can provide many of the same benefits and amenities their larger siblings do at significantly lower price points.

“Furthermore, federal investments in manufacturing and infrastructure will bring many of these areas good jobs and better economic prospects moving forward,” Semmes writes in the bulletin.

See the full report here.

About Yardi Matrix

Yardi Matrix researches and reports on multifamily, office and self-storage properties across the United States, serving the needs of a variety of industry professionals. Yardi Matrix Multifamily provides accurate data on 18+ million units, covering more than 90 percent of the U.S. population. Contact the company at (480) 663-1149.

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