27 Dec Multifamily rent growth turned negative in November
Report Data Courtesy
Due to an easing economy, rising interest rates, and less demand for multifamily units, multifamily asking rents have finally declined in November. National asking rent has now fallen to 7% year over year. For November, the average U.S. asking rent for multifamily decreased by $9 to $1,729 (as seen below). This is the largest decline over one month in over 10 years.
While this decline is concerning, the average multifamily rent had risen by 22% from January 2021 to October 2022. If this were to continue, it would be unsustainable for everyone involved. With this, there is over $2 trillion of excess savings that has helped households to maintain strong consumer spending, but this may run out over time. Most economists place over a 50% probability that a recession will occur in 2023 according to the National Association for Business Economics.
National renewal rents have increased by 11.1% year-over-year through September. National lease renewals were also at 63.8% through September.
Fannie May and Freddie Mac were granted $78 billion by the FHFA (Federal Housing Finance Agency), and they have originated $54.7 billion this year so far. It is looking unlikely that they will reach their capacity of lending $70 billion by the end of the year. GSE loans started out in the 3% range of this year but now are in the 5.5%-6.5% range. The GSE’s goals are to be a source of liquidity when other lenders aren’t active.
San Diego itself has still continued to grow but has recently slowed after a huge hike over the past 2 years as seen in the graph below. The rents in San Diego are looking to slow even more in the near future as we get closer to the predicted recession.