Buoyed by strong second-quarter economic growth and healthy demand, the average monthly rent for multifamily markets across the United States rose $3 to an all-time high of $1,409 in July, according to a recent report by Yardi Matrix. Year-over-year, rents are up 2.8 percent. Economic conditions remain favorable for the multifamily industry, which is especially true in secondary markets that are leading the nation in employment growth. Domestic migratory patterns are also energizing demand in key markets in Florida and the Southwest.
According to Yardi, average rents have risen $41, or 3 percent, year-to-date. This is in line with growth figures during the same period in recent years. This statistic is encouraging, because it exemplifies the fact that the expansion of multifamily has not run out of steam, despite headwinds of heavily increasing supply and affordability issues.
Rents grew year-over-year in each of the top 30 metros, led by Orlando (6.9%), Las Vegas (5.8%), the Inland Empire (5.5%) and Phoenix (4.9%). Strong demand fundamentals led by growing employment and relative affordability have propelled these markets to lead the nation. Slower-growing markets such as San Antonio (0.6%), Baltimore (0.8%) and Washington, D.C. (1.5%) are dealing with a mixture of heavy new supply and weaker demand. Affordability has become a serious concern in recent years for markets such as San Jose (1.3%), Seattle (1.0%), San Francisco, Boston, Austin (all 0.9%) and Denver (0.8%), but increasing rents, albeit short term, are a welcome sign for owners and operators.
The report notes, however, that economic headwinds are mounting in the form of tariffs and a lower bound to the unemployment rate. Yardi anticipates continued steady growth for the apartment sector, but supply and macroeconomic challenges will likely limit growth.
For the full article report from Yardi Matrix, click here.