Non-seasonal decreases in average asking rents are coming, Yardi Matrix says in a special multifamily rent forecast for 2023.
Yardi Matrix says interest rates that continue to rise, “will, eventually, take their toll on the job market, and rather than adding more jobs than economists expected every month, there will almost certainly be job destruction and the requisite pothole in household formation, leading to a non-seasonal decrease in average asking rents.”
Highlights of the report
“We now find ourselves at a juncture where more companies are pushing for at least a partial return to office,
- Layoffs are broadly hitting the tech sector
- Interest rates have been hiked dramatically
- The single-family housing market is paralyzed
- Yet the job market continues to beat consensus expectations almost every month.
“Household formation is intrinsically tied to job creation, so a robust job market fuels demand for housing, and conversely, a weaker job market depresses housing demand,” Andrew Semmes, Senior Research Analyst, writes in the report.
“Our view is that we are likely to start seeing job destruction and experience a recession beginning in the third or fourth quarter of next year, but that it will not be particularly deep or lengthy. At that point we will likely start to see broad declines or stagnation in average asking rents, but not enough to offset the gains that we expect in the first half of 2023,” Semmes writes in the report.
Rent Forecast for 2023 revised downward
Yardi Matrix has revised their 2023 forecast downward to 3.1 percent from 3.5 percent.
“We expect to see all of that growth in the first two to three quarters” of 2023, the report says.
“We have revised 2024 upward to 4.1 percent from 3.3 percent, as we expect economic growth to pick back up in the beginning to middle of the year.”
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.