SCOTTSDALE, AZ—The multifamily market is on track to deliver another stellar year as numbers continue to come in from October’s performance. Yardi Matrix reports that average US rents rose $1 for the month to $1,476, reaching yet another all-time high, while year-over-year growth has been at least 3% for more than a year.
Indeed, rent growth has been steady for the past few months, after decelerating from a 2019 high of 3.5% in May. “The fourth quarter is often a slower time for rent growth, but continuous demand and a slowly growing economy will likely keep rent growth above its long-term average,” says Yardi Matrix’s October report.
Perhaps what is more telling about the health of the apartment sector are the three Southeastern markets that have recently re-entered the top 10 after absorbing significant amounts of new supply. These cities are Raleigh, Charlotte and Nashville. They have had some of the strongest demographic demand for multifamily housing in the nation, but high deliveries had weighed on rent growth for much of the past few years, according to Yardi Matrix. “However, absorption remains very strong, and rents are growing accordingly.”
In fact, other than Houston, no metro has remained near the bottom of Yardi Matrix’s rankings for long. Phoenix, Las Vegas and Sacramento have been top gainers for years. In general, Yardi Matrix found that Southern and Western markets increased the fastest in trailing three-month rent growth, while tech markets slowed the most. Phoenix, the Inland Empire and Orange County led all markets in T-3 rent growth. Major tech markets including San Jose, Seattle, Boston and San Francisco, by contrast, saw the sharpest declines in October.
Yardi Matrix notes that these same tech markets have also been the most volatile on a short-term basis, as they were at or near the top of the T-3 rankings a few months ago. “With the high competition for top tech talent in these markets, there seems to be a correlation with rapidly growing rents in the summer, when recent graduates are moving and finding their first job, followed by a significant seasonal slowdown,” it said.