Multifamily rent growth is slowing, and even going negative in some areas. But, as RealPage notes in a new analysis, the world hasn’t ended.
“There’s a lot of panicky ‘It’s a big slowdown!’ analysis out there right now, but remember: Nearly every major rental owner, operator and analyst expected to see moderation in rent growth in 2022 compared to the historic peaks of 2021,” the firm wrote.
But that’s for the most part. It did add “the moderation trends are not equally distributed across the country,” with pockets that are concerning.
Some are in popular desert regions. The RealPage analysis says that Phoenix looks like it might have overheated. August asking rents in the metro area saw a first month-over-month decline (0.4%) since May 2020. Year-over-year rent growth that was 26.7% in January is now down to 7.9%.
Similarly in Las Vegas, August asking rents fell half a percent from July and year-over-year rents that grew at 24.7% in January were at 8.8% last month. Both areas saw retention rates drop “from abnormally high levels” to something more realistic.
Florida, which has been one of the examples of success in the industry, saw multiple metros see rent growth fall between July and August. West Palm Beach, Jacksonville, Tampa, Fort Lauderdale and Orlando all saw at least a 9-percentage point drop in year-over-year rent growth rates since January.
That January-to-August year-over-year rent growth chill was greater in New York, Boston, and San Francisco than in Dallas, Houston, San Antonio, Charlotte, or Virginia Beach.
“Markets seeing the least slowdown in rent growth tend to be steady-eddy Midwest markets like Cincinnati, Minneapolis, Milwaukee, Cleveland, Kansas City, Columbus, Detroit, St. Louis and Indianapolis,” the firm said.
Then again, any such analysis is ultimately a reflection of the specific data in use, showing the limitation of a single source. A Yardi Matrix study had a different view: “Asking rents increased in only 10 of Yardi Matrix’s top 30 markets in August, led by Philadelphia, San Francisco and Nashville (all 0.5%). New York and Miami also posted solid performance (0.3%). Metros with the largest decreases in asking rents include Raleigh (-1.3%), Seattle (-1.1%) and the Inland Empire and Las Vegas (both 0.8%).”
So, rent growth chill was notable for New York in one study while quite different in another. As usual, get multiple sources of information.