The rate of rent growth in multifamily has slowed slightly as year-over-year asking rents decelerated, from 16 percent in April to 14 percent in May, Yardi Matrix says in a special report called “Multifamily Rent Forecast Update.”
“So while we are seeing the usual seasonal increase leading into the summer months, 2022 does not look like a repeat of 2021 even though rent growth remains elevated,” Yardi Matrix writes in the report.
“Our forecast update for this month sees most markets receiving an increase to their end-of-year projections, and some markets have been revised upward substantially. The biggest increases were concentrated in secondary and tertiary markets that continue to outperform expectations, with Scranton-Wilkes-Barre, Wilmington, South Bend and Spokane all seeing a greater-than-5 percent increase for our end-of-2022 forecast.”
Less Than 50 Percent Chance of a Recession
While high inflation is forcing the Federal Reserve to raise interest rates the job market still remains strong.
“While the chance of a recession in the next 18 months has increased, we still see a less than 50 percent chance of that happening. Strong demographics and limited supply will keep apartment rent growth strong throughout the year,” Yardi Matrix says in the report.
However there is caution in the report about the Fed, interest rates and inflation plus the war in Ukraine all of which have the potential to cause disruption.
“While it will be prudent to keep an eye on these risks, we still believe that we will most likely make it through 2022 without a recession or major shock to multifamily markets.
“The fundamentals of supply and demand remain strong, and the job market is still hot. The rate of increase in asking rents might be beginning to slow down, but growth remains significantly elevated by historical standards. The industry will have to navigate some headwinds, but it is well positioned to do so,” writes Andrew Semmes, Senior Research Analyst for Yardi Matrix.
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.