Rent growth hit a record high for the first quarter, according to Yardi Matrix, as multifamily rents surged again in March.
However, concerns about the economy going forward show the potential for headwinds to rent growth and inevitable decline in some markets.
“Demand is expected to remain healthy, but rent growth is likely to decelerate as concerns grow about the economy. Inflation is moderating slowly, and rising rents and energy prices may keep it elevated longer than expected,” the report says.
Here are highlights from the report:
- Multifamily performance was strong once again in March, though rent growth has decelerated slightly from 2021 levels. The average U.S. asking rent rose $14 in March to an all-time high of $1,642, with year-over-year growth dropping 50 basis points to 14.8 percent.
- Asking rents increased by $34 nationally, up 2.1 percent, in the first three months of 2022, which is record growth for a first quarter. However, rent growth is unlikely to keep pace with 2021, as last year’s explosive movement started in the second quarter. Plus, economic growth is set to slow as inflation takes hold and the war in Ukraine pushes energy prices up and creates an element of uncertainty.
- Rents for single-family rentals continue to rise, though the rate of growth is decelerating. The average U.S. rent rose $14 to $1,999 in March, while year-over-year growth dropped 90 basis points to 14.1 percent.
“The big picture that emerges from March multifamily data is that the market remains healthy, though signs point to the inevitable deceleration in some markets. Meanwhile, economic conditions and global events contain headwinds that justify the expectations of moderation and caution,” Yardi Matrix writes in the report.
Rent Growth Continues Strong in the Southwest and Southeast
Rent growth continues to be a national phenomenon, led by the migration to the Southeast and Southwest. The top five metros—Miami, Orlando, Tampa, Las Vegas and Phoenix—all showed asking-rent increases of 23 percent or more.
“Demand for housing continues to be robust, led by young workers whose rapidly rising wages provide the wherewithal to form independent households apart from parents and roommates.
“Household growth and absorption are likely to slow to more normal levels in 2022, to about half of last year. That would presage healthy—albeit more moderate—gains in multifamily fundamentals,” the report says.
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.