Dive Brief:
- The national average multifamily rent fell by $6 from October to November, down to $1,713, according to the latest Multifamily National Report by Yardi Matrix. This marks the third month in a row that the national average has fallen.
- Year-over-year rent growth has held steady at 0.4% — still down 490 basis points since the start of 2023.
- Regional rent performance was mixed. Cities in the Northeast and Midwest saw generally positive YOY rent growth, led by New York City at 6.2%, while western and Sun Belt metros are falling behind. Seven out of Yardi’s top 30 markets are experiencing negative rent growth of -3.0% YOY or lower.
Dive Insight:
Headwinds for property owners include weak near-term rent growth as a consequence of inflation, a loosening job market, high deliveries in some markets and the negative effects of elevated interest rates on the availability of capital. Uncertainty about the future has led to paralysis in property sales, according to Yardi.
Under normal seasonal conditions, rents do not change much in November as people tend not to move during the holidays, Yardi noted. However, this trend has been disrupted in recent years, both on the upside and the downside, by the ripple effects of the COVID-19 pandemic.
| Market | YOY rent growth, November 2023 | YOY rent growth, October 2023 | Difference |
|---|---|---|---|
| New York City | 6.2% | 5.8% | 0.4 |
| New Jersey | 4.0% | 4.1% | -0.1 |
| Kansas City, Missouri | 4.0% | 3.0% | 1 |
| Columbus, Ohio | 3.4% | 3.5% | -0.1 |
| Chicago | 3.2% | 3.2% | 0 |
| Boston | 2.8% | 2.3% | 0.5 |
| Indianapolis | 2.3% | 2.9% | -0.6 |
| Philadelphia | 2.0% | 2.1% | -0.1 |
| Washington, D.C. | 1.5% | 1.2% | 0.3 |
| San Diego | 1.5% | 0.9% | 0.6 |
SOURCE: Yardi Matrix
While rents are falling and growth slowing in the near term, Yardi emphasized the strength of multifamily performance over the last three and a half years. Asking rents have risen 23.5% since March 2020, led by Sun Belt metros and the suburbs of gateway markets.
Many of the markets with the steepest increases over this period are in low-cost, fast-growing areas. Rents in Knoxville, Tennessee, have risen 51.5% since March 2020, while those in Albuquerque, New Mexico, have risen 45.5%. Retirement destinations have also seen steep gains, such as the Southwest Florida coast at 49.1% and Palm Beach, Florida, at 43.1%.
The gateway markets saw the lowest gains, though their suburbs often performed well. While rents have risen 12.0% since March 2020 in New York City proper, they jumped 34.9% in Central New Jersey, a bedroom community for NYC.
Still, demand and growth remain positive in urban centers, according to Yardi. Of the major markets, only San Francisco recorded any drop in the average rent since March 2020 at -2.5%.
