Nation Continues to See Record Rent Growth

The average U.S. asking rent increased by $23 in October to a record high of $1,572, according to Yardi Matrix’s Multifamily National Report. In addition, asking rents were up 13.7% year over year.

This continued growth has been driven by an ongoing surge in demand that started in the spring, according to the report. The average occupancy rate of stabilized properties also has reached a record 96.1% in September, a 1.4% year-over-year increase.

“Since March, the average U.S. asking rent has increased by $179, or roughly the amount of increase over the previous five years combined,” stated the report. “The question now is how long before the market begins to decelerate to some semblance of normal growth. If typical seasonal patterns hold, growth will soon recede.”

Yardi Matrix said historically rent increases tend to flatten between September and March, with analysts expecting growth starting to slow as short-term factors like the impact of stimulus funds and pent-up consumer demand are met.

In almost a quarter of Yardi Matrix’s top 30 markets, rents were up 20% or more year over year, with Phoenix topping the list at 26.3%. Tampa, Florida, and Las Vegas also experienced strong rent growth at 25.8% and 23%, respectively. In 23 of the top 30 markets, rents were up by at least 10% year over year. Minneapolis at 4.8% was the only metro with asking rents up less than 5%. According to Yardi Matrix, even metros that typically see slower growth have experienced gains, including Baltimore, 13%; Philadelphia, 10.7%; and Indianapolis, 10.4%.

This rent growth isn’t contained to the nation’s largest markets. In the 20 metros outside the top 30, 14 saw double-digit year-over-year rent growth, with the Southwest Florida Coast leading the way at 29.1%, followed by Jacksonville, Florida, at 21.7%, and Tucson at 20.1%.

Asking rents nationally rose 1.5% in October, a 50-basis point acceleration from the previous month. Month over month, rents in high-end Lifestyle units increased 1.6% in October while Renter-by-Necessity units rose by 1.2%.

The Sun Belt continues to see strong month-over-month growth, with rents rising by 2% or more in eight metros—Phoenix and Orlando, Florida, at 2.5%; Miami, California’s Orange County, and Las Vegas at 2.4%; Tampa, Florida, at 2.3%; Atlanta at 2.1%; and Charlotte, North Carolina, at 2%.

No metros registered negative growth overall month over month in October. Gateway metros also saw solid rent increases, including New York at 1.6%, Los Angeles at 1.4%, Boston at 1.3%, and Washington, D.C., at 1.1%.

Single-family rents also continue to rise, up 14.7% year over year nationally. According to Yardi Matrix, demand is strong in the fast-growing regions in Florida and the Southwest that are benefiting from in-migration trends.

Growth is strong across the board, but some metros are seeing rent increases topping 40%, such as Miami at 41.9% and Tampa at 41%. Phoenix follows at 24.8%. The occupancy rate was up 0.8% year over year through September but is inconsistent on the metro level. Texas metros led the nation in occupancy growth, with Houston at 9.1%, San Antonio at 7%, and Austin at 3.3%, while nine metros saw flat or negative occupancy growth, according to Yardi Matrix.

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