Multifamily Rent Growth Remains Consistent

Multifamily Rent Growth is tops in Phoenix in April according to Yardi Matrix report

Multifamily rents were up a healthy 3.0 percent year-over-year in April and year-to-date, rents are up 0.8% across the U.S., according to the latest Yardi Matrix report on multifamily rent growth.

“Multifamily rents continue to increase at a steady rate, albeit slightly slower than in recent years,” Yardi Matrix said in the report. And, the latest “is a solid number although less than the growth rate during that period in recent years.”

“With the prime rent growth season just starting, it remains to be seen whether this year’s gains will be stellar or merely average, but in any event there seems to be no reason to think the multifamily juggernaut is going to hit the pause button,” Yardi Matrix says in the report.

“Absorption is strong, as the national occupancy rate for stable properties is 94.8% and has dropped only 10 basis points year-to-date despite the delivery pipeline adding some 300,000 units per year,” the report says.

The Phoenix metro drove the highest multifamily rent growth in April according to the latest Yardi Matrix report.

Highlights of the multifamily rent growth report

  • Multifamily rents increased by $5 in April to $1,436. Year-over-year growth fell to 3.0%, down 30 basis points from March, as the growth was less than in previous years.
  • Market performance has been remarkably consistent over time and across geographic zones. Growth continues to be highest in lifestyle metros in the Southwest, Southeast and California, but other than Houston there aren’t many markets in which growth trails long-term averages by any significant degree.
  • Multifamily absorption remains robust, as the economy continues to pump out jobs and demographic factors are still positive.
  • On the metro level, the Southwest is king, as Phoenix caught up to Las Vegas in April for the highest growth rate at 7.3%.

 Year-over-year multifamily rent growth

  • Rents increased 3.0% year-over-year in April, marking a 30-basis-point decline from March and a 60-basis-point reduction from the beginning of the year. Most markets are regressing toward the national mean, and 22 of our top 30 markets have rent growth between 2% and 4%.
  • Las Vegas and Phoenix (tied at 7.3%) top the overall rankings. Both markets also led our rankings by asset class. Phoenix Renter by Necessity (RBN) increased 8.0%, compared to 6.3% growth for Lifestyle. In Las Vegas, however, Lifestyle units (7.5%) outpaced RBN units (6.8%), and it is one of the only markets in the nation where luxury rents are growing faster than workforce rents.
  • Rents increased in all of the top 30 markets over the past year. At 0.6%, Houston was the only market with a gain of less than 1.4%.

Multifamily property owners may have to go green

  • Fannie Mae and Freddie Mac originated $30.3 billion of loans in 1Q19, up nearly 20% from the same period a year ago.
  • The agencies have raised the spread between “capped” and “uncapped” loans as part of an effort to not too quickly use up their $35 billion annual allocation that is set by the Federal Housing Finance Agency.
  • The discount for loans that qualify for the agencies’ green and affordable lending programs has risen recently to 30 to 55 basis points.

The Yardi Matrix report says multifamily property owners may or may not want to “go green” on their own—but they may have little choice if they want to borrow from Fannie Mae or Freddie Mac later this year.

The government-sponsored enterprises (GSEs) recently increased the pricing differential between loans with no strings attached (known as “capped” loans) and loans that require the borrower to improve energy efficiency or service low-income tenants (“uncapped” loans). The agencies are limited to $35 billion of capped loans in 2019, but they can originate an unlimited number of uncapped loans.

About Yardi
Yardi® develops and supports industry-leading investment and property management software for all types and sizes of real estate companies. Established in 1984, Yardi is based in Santa Barbara, Calif., and serves clients worldwide.

Yardi Matrix is the industry’s most comprehensive business development and asset management tool for investment professionals, equity investors, lenders and property managers who underwrite and manage real estate investments in multifamily, industrial, office and self-storage. Email, call 480-663-1149 or visit to learn more.