Multifamily fundamentals are expected to stabilize as soon as the second quarter of this year, according to new research from CBRE. In a new report, the firm says it expects “steady market recovery” through the second half of 2021.
Net absorption for multifamily during the fourth quarter of 2020 totaled 55,600 units, a number the firm described as “far better than expected” since leasing is normally anemic during these months of any year, as well as during recessions. Absorption for the past four quarters clocked in at 190,600 units, and suburban submarkets, smaller markets, and the Midwestern, Mountain West and Southeast regions fared better than average—as did Class B and C assets.
The overall vacancy rate lifted 10 basis points to 4.5% in Q4, a 50 basis point increase year-over-year, and average rents dropped 4.2% from the same period in 2019. A slew of new deliveries also significantly outpaced demand during the fourth quarter, as average rents declined 1.6% to $1,666 per month.
Overall, though, average rents for US apartments are nearing all-time highs last seen in the early part of last year, as GlobeSt.com previously reported. Effective asking rents across the largest 150 metros in the country in January 2021 were only 0.3% lower year-over-year, with markets in Riverside, San Bernardino, and Sacramento posting the largest increases. Other hot markets include Memphis, Greensboro/Winston-Salem, Virginia Beach, Phoenix, and Detroit.
Conversely, San Francisco, San Jose, and New York led the list of biggest rent losers—and recent analysis from Apartment List predicts those markets may be nearing the bottom of their respective price corrections.