Multifamily asking rents have finally begun to ease after nearly two straight years of rent growth. According to a new report from Apartments.com, the streak of monthly growth in asking rents, dating back to December 2020, finally came to a halt this summer. From July to August, average asking rental prices decreased by 0.1%. “We are seeing a complete reversal of market conditions in just 12 months, from demand significantly exceeding available units to new deliveries now exceeding lackluster demand,” said Jay Lybik of CoStar Group, the parent company of CoStar Group. Apartments.com.
Of the country’s 40 largest markets, only 13 posted positive or neutral asking rents. Nashville saw the biggest drop at 1%, while on the other hand, Orange County, California saw the biggest rise, with asking rents up 1%. Some cities that have been hot real estate markets for the past two years did not fare well in the report. Sunbelt cities made up the majority of markets that posted negative results, including Orlando, Austin, Fort Lauderdale and Charlotte. The region is home to six of the top 10 growth markets nationally, but since posting some of the fastest growing rental numbers last year, it is currently experiencing a major downturn.
Although monthly growth is down, year-over-year rental growth remains positive. The three markets with the strongest year-over-year asking rent growth were all in South Florida: Orlando, at 12.8%; Miami, at 12.4%; and Fort Lauderdale, with 11.1%. Florida has been a magnet for migration during the pandemic. Between July 2020 and July 2021, the state’s population added 211,305 new residents and major corporations like Blackstone and Citadel planted flags in the city’s booming office market. However, the report notes that the positive impression given by the year-over-year data does not paint a full picture of what is happening in the multifamily market. “Major markets continue to decline rapidly at a time of year when they should have posted their best results,” the report’s authors wrote.