Multifamily rents remained flat for the third consecutive month. However, the national numbers appear misleading, according to Yardi Matrix, with a growing divergence between primary and secondary markets.
Year over year, rents fell 0.6% nationwide. While rents are falling in gateway markets as outmigration has been accelerated during the COVID-19 pandemic, secondary and tertiary markets are seeing gains.
“With each passing month, outmigration from large gateway markets to secondary and tertiary tech hubs is amplifying. At this point, the apparent winners are markets in close proximity to large gateways but with significantly lower costs of living,” noted Yardi Matrix.
At or near the bottom of the rankings for year-over-year rent growth are gateway cities New York (-10%), San Francisco (-8.2%), Washington, D.C. (-3.7%), Boston (-3.1%), Chicago (-2.9%), and Los Angles (-2.8%).
California’s Inland Empire (6%) and Sacramento (5%), Las Vegas (3.9%), and Phoenix (3.8%), which are benefitting from the migration out of the Bay Area and Los Angeles, lead Yardi Matrix’s top 30 markets for year-over-year rent growth. The Inland Empire’s average rent of $1,669 is 23% less than the average in Los Angeles, and Sacramento’s average rent of $1,609 is 34% less than in San Francisco.
According to Yardi Matrix, tertiary markets are leading all markets in rent growth. With strong tech markets, Boise, Idaho (8.1%), Huntsville, Alabama (6.8%), and Portland, Maine (6.5%), are continuing to attract renters from coastal markets.
On a month-over-month basis, the same trends are being seen, with short-term rent growth remaining flat in October nationwide. Inland Empire, Las Vegas, Sacramento, and Phoenix all saw increases of 1% or more on a monthly basis. “These markets tend to outperform during fall and winter months, as they are not susceptible to seasonal weather that slows renting in Northern markets, but this year’s performance is even better than normal, as migration into these markets continues to increase,” said Yardi Matrix.
In addition to the six gateway markets, some secondary markets are getting squeezed on rents and occupancy. Orlando, Florida; Austin, Texas; Seattle; and Minneapolis saw month-over-month rent declines.
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