The asking rent forecast for 2023 has been downgraded from 3.1 percent to 2.6 percent rent growth in the latest Yardi Matrix Special Bulletin.
The report says rent growth continues to moderate and is “largely driven by the downward revision of some large markets that have an outsize effect on the average, including Eastern Los Angeles County, Miami, the South Bay Area, Tampa and Manhattan,” the report says.
Yardi Matrix expects to see changes coming throughout 2023 impacting asking rents and rent growth.
“We do not anticipate significant rent declines, either, but rather a return to growth that is much more in line with what was “normal” before the pandemic, although likely on the lower side of normal,” Andrew Semmes, Senior Research Analyst at Yardi Matrix, writes in the report.
Full Impact Of Federal Reserve Rate Increases Not Yet Felt
Many are predicting the Federal Reserve will continue to increase interest rates in February and again in March.
However, the report says, “Pressure will continue to build on the Fed to stop rate hikes as layoffs mount in the tech sector and begin to spread more broadly into other sectors, and as inflation continues to show real signs of cooling. “
Volatility In Rents In Class A
The report predicts the most volatility in rents will happen in the higher-end Class A properties.
“That volatility will be exacerbated in markets with large amounts of supply being delivered, as new market-rate housing almost always comes in at the top of the market. However, while we expect to see turbulence for Class A properties, we do not expect to see the bottom fall out,” Yardi Matrix says.
“Our overall outlook for multifamily asking rents has not changed much, although we have reduced our expectation for average asking rent growth for 2023 to 2.6 percent from 3.1 percent. The magnitude of that change is largely driven by the lowering of our forecasts in some large markets,” Semmes writes in the report.
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.