Rents register the strongest gain in 20 months, up $8 to $1,721 in March, for a 0.9% year-over-year increase, notes the latest Yardi Matrix national multifamily market report.
Report highlights:
- The U.S. average asking rent rose $8 to $1,721 in March, up 0.9% year-over-year.
- Rent growth was even across asset classes, up 0.5%.
- Multifamily loans totaling $525 billion will mature by the end of 2029.
- Single-family rents rose 1.2% year-over-year through March to $2,144.
Strongest rent increase in 20 months
The U.S. average asking rent increased 0.9% year-over-year through March, up $8 to $1,721, marking the largest gain in 20 months. Although one month of data is insufficient to point to a trend, rent’s performance is encouraging as it is in line with the 0.6% average for March and the first quarter in the five years preceding 2020. It also signals a normal seasonal pattern after several years of exceptional performance triggered by the pandemic lockdowns in 2020. Another good sign is rising rent in markets with heavy supply growth such as Orlando—rents rose 1.4% in March while stock expansion surpassed 4.0% over the last 12 months—and Charlotte, where rents rose 1.3% in March, with supply growth at 5.5% in the last year.
Markets in the Midwest and Northeast continued to outperform, led by New York City (5.0% year-over-year), Columbus (4.5% year-over-year), Kansas City (3.7% year-over-year), Indianapolis (3.5% year-over-year) and New Jersey (3.4% year-over-year). Furthermore, of Yardi Matrix’s top 30 metros, 13 recorded negative rent growth over the past year, while over the first quarter only four posted negative rent growth, and just two in March. Austin remained the weakest performer in rent growth, down 5.9%. The occupancy rate, below the 95.0% mark since last June, decreased another 10 basis points in February to 94.5%. The rate inched up only in San Francisco (0.1%) and was flat or negative in all others. More so, 21 metros posted decreases of 0.5% or more, and Atlanta and Indianapolis registered the largest declines, down 1.2%.
Seasonal pattern boosts rents across segments
On a monthly basis, rents rose 0.5% in both Renter-by-Necessity and Lifestyle property segments. Monthly rent gains were led by Columbus (1.3%), Orlando and Seattle (both 1.1%), and the largest declines were recorded in Nashville (-0.3%) and Baltimore (-0.1%). Rents contracted in two of the top 30 metros in Lifestyle and three of the top 30 in RBN, but declines were below 0.5% in either category. Meanwhile, rents increased in six metros by 1.0% or more in Lifestyle and in five in RBN.
Renewal rent growth continued to decelerate, up 4.6% year-over-year in January, 370 basis points below May’s peak. Leading in renewal rent growth were Indianapolis (8.0%), San Diego (7.8%) and Orlando (7.7%). The only two metros that posted negative renewal rent growth were Las Vegas (-2.0%) and Austin (-1.5%). The national lease renewal rate clocked in at 64.8% in January, the first dip below 65.0% in more than two years. The highest rate was recorded in New Jersey (82.6%) and the lowest in San Francisco (53.5%).
Distress has yet to hit the market, as delinquency rates remained low due to borrowers extending their loans by either paying down some of the loan balance or adding extra services. But in Yardi Matrix’s database of 58,000 multifamily loans totaling $1.1 trillion, 6,800 properties, or $150 million are set to mature by the end of 2025, and $525 billion will mature by the end of 2029.
SFRs maintain strong fundamentals
The national asking rent for single-family rentals rose $9 in March, to $2,144, the equivalent of a 1.2% year-over-year increase. The sector’s occupancy rate in February fell to 95.3%. Fundamentals are sustained by strong demand for single-family homes in times when home sales are weak due to a prohibitive cost of buying. According to the report, the median home mortgage payment is about 40% higher than the median rent in the U.S.
Read the full Yardi Matrix Multifamily National Market Report: March 2024.
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