06 Jul Multifamily Rent Forecast Update – Yardi Matrix

Source: Yardi Matrix

While the average month-over-month asking rent increased to 1.1% in May from month-over-month in April (1.0%), the year-over-year average asking rates have actually decelerated from 16% in April to 14% in May. It is not looking the same year for rental increase as we saw in 2021.

Inflation continues to rise at a 40-year high while food and energy prices are elevating as well. To combat this, nonfarm payrolls have increased by 390,000 in May (above the Dow Jones estimate of 328,000). Due to this, it is causing more people to enter the workforce. This has helped the U.S. reach a historically very low unemployment rate at 3.6% (the lowest it has been in 50 years). The Fed is also likely to ramp up its pace of rate hikes, which would increase the chances of a recession for this year and next.

The ever-increasing energy prices are affecting everyone. This is largely due to the war between Russia and Ukraine. Both are large exporters of energy. Now that there is less supply for the U.S. to utilize, it has heavily increased the prices, and this will continue to have a massive impact on lower-income households. 

With this, the Fed was too late with quantitative tightening and hiking of the federal funds rate and is now having to play catch-up with the inflation. It is expected that the Fed will raise rates at every FOMC meeting left this year with multiple hikes of 50 basis points or higher. If the Fed manages to reduce inflation without creating a recession, then the multifamily market will stay strong and still have high demands. As of now it looks as though we will go through 2022 without a recession or major shock in multifamily markets. While the rate of increase in asking rents is slowing down, there is still growth that is elevated by historical standards.

Download Full Report here: Special Report Multifamily Rent Forecast Update – Yardi Matrix