The multifamily industry has seen extreme growth over the past year. Setting records for rent growth in nearly every market. Is the market cooling down? Or will this cycle continue to accelerate?
National asking rents were up 11.4% on an annual basis as of September 2021. According to the National Multifamily Report by Yardi Matrix, “Sun Belt Metros have seen the largest growth over the past year. Phoenix, Tampa, Las Vegas, and Miami, have seen asking rents surpass 20% in September”.
What is causing these exploding numbers?
There is an extreme housing shortage in all markets that has caused occupancy levels to rise and now putting pressure on asking rents. In markets that are seeing the highest growth, absorption rates are surpassing newly completed units by far which highlights the need for more new developments.
Lifestyle Rents up (13.4%) while Renter By Necessity up (9.5%). Is this caused by pent up savings accounts by americans? Or is there a shift in lifestyle habits? There is still an affordability crisis nationwide, and I believe the Pandemic has placed a ‘curtain’ in front of this issue.
While some of the major metros saw extremely high growth numbers, other major markets such as Seattle, Chicago, and Boston have seen a decline in overall rent growth. These markets were terribly affected by the Pandemic, and are at a slow recovery while the ‘work from home’ and ‘migration’ subjects are still unknown.
Job Growth continues to rise especially in Sun Belt Markets.
According to the Midyear Multifamily Outlook by Marcus & Millichap, “6.5 Million Jobs will be created in 2021, producing the highest annual growth rate in more than 30 years”.
In Conclusion, the multifamily sector continues to show strong growth, and is projected to continue these trends into 2022.