People moving around due to the pandemic and job changes or losses, government stimulus, and a hot housing market have all contributed to unprecedented levels of multifamily rent growth, Yardi Matrix says in its latest report.
“A slew of factors has pushed asking-rent growth across the country to levels not seen in decades,” Yardi Matrix says in the multifamily report.
“Rent growth will not be able to continue at these levels indefinitely, but conditions for above-average growth are likely to persist for months,” the report says.
Highlights of the multifamily rent-growth report
- Multifamily asking rents increased by 6.3 percent on a year-over-year basis in June. “This is the largest year-over-year national increase in the history of our data set,” the report says.
- Rents grew an amazing $23 in June to $1,482—another record-breaking increase. Lifestyle rents are growing at a faster pace than Renter-by-Necessity rents, “something we have not seen since 2011 and another sign of a hot market.”
- Single-family (Built-to-Rent) rents grew even faster, at an 11 percent year-over-year pace.
- “To be clear, the increases represent growth in what landlords are asking for (in) unleased apartments. Increases are smaller for tenants that are rolling over existing leases.”
The 3 big factors pushing rent growth to unprecedented levels
No. 1: Migration
Job loss during the pandemic plus the ability to work from home meant lots of people moving around. Rents are growing rapidly in both the Southwest and Southeast. Phoenix is up 17 percent, Tampa and the Inland Empire in California are up 15.1 percent. Not far behind are Las Vegas at 14.6 percent and Atlanta at 13.3 percent. “These metros were lower cost compared to larger gateway metros, but with double-digit rent increases the affordability of these metros has begun to decline,” Yardi Matrix said in the report.
No. 2: Government stimulus
Government stimulus checks, enhanced unemployment benefits and more than $45 billion of direct renter payments have all helped to prop up the multifamily industry. “All of this stimulus led to consistent levels of collections across the country,” the report says.
No. 3: Hot housing market
The S&P Case-Shiller Index shows home prices are up 14 percent year-over-year through June. “Many potential home buyers have been forced out of the market, and in turn, decided to rent an apartment for another year. Another pressure on the cost of housing is the lack of new supply. The U.S. is on track to build 1.5 million units in 2021, according to the Census Bureau, but that will not be enough to satisfy the demand for housing,” Yardi Matrix said in the report.