Multifamily rents are rising as demand remains stable and healthy, but rent growth is slowing in some markets, Yardi Matrix says in the June National Multifamily Report.
“While some markets are experiencing slowing growth, multifamily largely continues to perform well, with a solid 95 percent occupancy rate and moderate rent growth in most metros. However, economic uncertainty and high interest rates present ongoing challenges, and the sector is dealing with a refinancing crisis,” Yardi Matrix says in their national report for June.
Highlights of the June report
- The average U.S. asking rent rose $7 in June to $1,726, while year-over-year growth fell to 1.8 percent, down 70 basis points from May and—outside of the pandemic year—the lowest growth rate since 2011. However multifamily demand remains stable.
- Readers of the Matrix monthly report might notice that the Top 30 metros have been refreshed to provide a regionally diverse mix that reflects the highest amount of population and multifamily stock, along with the most growth.
- Single-family rental rates increased $5 in June to $2,103, while year-over-year growth fell 80 basis points to 1.3 percent. Occupancy rates are holding up, reflecting robust demand as home sales sputter.
“Worries coming into the year about a hard landing for multifamily seem to be unfounded, but the market’s ongoing growth is somewhat fragile, given the Federal Reserve’s attempt to cool the job market,” Yardi Matrix says.
“That effort does not appear to be over, as officials have signaled more rate hikes to come. Thus, the ongoing crisis for properties in need of refinancing is far from over.”
Lease renewal slowing continues
Renewal rent growth is decelerating “but very slowly, reflecting the strength of demand and the large gap between existing residents and asking rents.
Renewal rents, the change for residents that are rolling over existing leases, rose 8.5 percent year-over-year nationally in April, down from 8.6 percent in March.
National lease renewal rates were 64.4 percent in April, down from 65.9 percent in March.
Borrowers Not Interested In high-cost mortgages
Yardi Matrix says the increase in interest rates over the last 15 months “has changed the mortgage market for multifamily. Borrowers have less appetite for debt, and short-term fixed-rate loans are becoming increasingly popular.
- Lenders, including Fannie Mae and Freddie Mac, have seen mortgage volume plunge as a result of a wide market bid-ask spread.
- More borrowers prefer five-year fixed-rate loans that can be prepaid after three years to provide flexibility when rates are expected to decline.
Read the full Yardi Matrix 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.
