10 Dec Yardi Matrix Special Report: Multifamily Rent Forecast Update
From September to October asking rents went up by only 0.16%. While this is a very small increase (and another month of deceleration in rental growth), it is actually expected to be around that at this time of the year. The month over month rental increase for this time before Covid was actually on average about 0.08%. So, when looking at this comparison in historical data, the small rental increase we currently see is actually better than the average from the past.
Amid the Fed’s delayed sharp interest rate response to inflation, there is a concern for the uncertainty for 2023. But with this, consumer spending was actually up by 1.8% in October (the biggest jump in 8 months). Along with this, there have been 261,000 jobs added in October while the unemployment rate is at 3.7%. Through these data points it still hints at a recession in the later year of 2023, but it will likely be relatively mild.
High mortgage rates have made the single-family home markets unattractive to both buyers and sellers. Sellers worry about not wanting to give up their home for less than they thought it was worth and also potentially needing to find a new home as well post sale. Buyers can now only finance a portion of what they could at the beginning of the year. Through this it shows a possible higher demand for multifamily properties due to the friction of financing in the single-family home market.
The overall end-of-year outlook for 2022 has been revised from 6.9% to 7.6% due to the over performance throughout the Southeast and Midwest markets. The expectations for 2023 have been lowered from 3.7% to 3.5% due to the upcoming likelihood of the upcoming recession.