10 Apr Multifamily Rents Advance as Economic Doubts Swirl
The average multifamily asking rent in the US went up $3 in March to $1,706. The national asking rent growth turned positive for the first time in 4 months. With this being said, nationally the year-over-year growth actually dropped to 4%.
With the collapse of several banks making the financial markets unpredictable at the moment, the multifamily market has remained relatively stable. Q1 2023 produced no gains in multifamily rents and occupancy rates for the first time in 10 years. While this isn’t ideal, given everything going on in the financial markets, the multifamily market still did not decline.
The biggest concern is seeing how the economy will continue to handle these interest rate hikes. To get out of this, it is suggested that the Federal Reserve should cause a recession in order to change the inflation target to something above 2%, or to slow down interest rates to get the inflation rate back to ease back to 2% and potentially have the economy stable at inflation rates at 3%-4%.
Year-over-year renewal rent growth has increased by 9.3% nationally, and renters are still willing to pay. This came at the risk of falling demand, which ultimately has not yet occurred. With this, rent growths in 2023 are looking to be minimal due to such high inflation over the past couple of years. Below is a graph that depicts San Diego’s rental growths over the last 5 years.
