Sixteen of the top 30 U.S. multifamily markets bested the national average for year-over-year growth in January, according to the latest report from Yardi Matrix.
The report says occupancy remained near 95 percent.
While average rents fell by one dollar, “that’s a seasonal occurrence and doesn’t detract from the market’s overall strength,” the report says. “The decline in rents can be attributed to seasonality and could continue for the next few months, until we move into spring.”
Yardi Matrix expects strong growth to continue in the West and Southwest. Over the past year, rent growth in the top markets was 7.4 percent in Phoenix, 5.4 percent in Las Vegas, and 5.1 percent in Sacramento.
Watch regulatory risk in some markets
“The slowing economy has had little effect on multifamily, but one potential headwind to keep in mind for 2020 is regulatory risk, as evidenced by statewide rent control (California, New York and Oregon), increased local regulation on security deposits (Cincinnati) and resident acceptance criteria (Seattle).
“However, this risk does not present an insurmountable barrier nationally,” the report says.
Job growth remains strong
Job growth is still strong and is carrying the economy forward, as it has throughout the current expansion.
Technology has caught the headlines, but strong gains in education and healthcare, professional and business services, and leisure and hospitality have also contributed significantly to the labor force, the report says.
- “The economy shows mixed signals of both slowdown and growth, as the job market propels forward into a new decade.
- “Political uncertainty as the election nears will likely lead to a busy first and second quarter for transaction activity, followed by a slower summer and fall, as buyers grow cautious of a changing administration.
- “Multifamily fundamentals remain strong and steady, despite a potential slowdown in transactions. Development is slowing modestly, but rent growth and occupancy will benefit,” the report says.
“The nationwide housing shortage continues to provide wind in the sails of steadily growing rents for both high-end and workforce housing,” the report says.
“New supply remains concentrated mainly in primary and top-tier secondary markets with heavy influence from the tech sector. Expect 2020 deliveries to decline slightly from previous years, falling under 300,000 units.
“As the recovery continues and the presidential race moves forward, the multifamily market remains well-balanced and poised to continue its steady march forward,” the report says.