If business strategy has included depending on rent rate increases in multifamily, then the Apartment List National Rent Report for February 2022 is something to consider for a potential corrective course.
Year-over-year, apartment growth has been a record, according to the firm, standing at 17.8%. However, the bulk of that occurred earlier in 2021. Over the past four months, rents grew by a collective total of 0.9%. Month-over-month growth in the period was about 0.2%.
Last year, multifamily looked hot. After understandable fears, even in 2020 the sector didn’t collapse from evictions and collections were strong. But by 2021, fundamentals were back and multifamily became the industry’s second darling, after white-hot industrial. Some experts said that apartment rent growth was sustainable over the long term.
But even in October there were signs of slowing. According to RealPage rents were up 13.1% year over year but move-in rents in October were 6% over September, which was the slowest pace last year.
Two different companies and two different sets of data mean you can’t expect exact matches in outcome. It’s the similarity in trends that are important. RealPage pointed to “the normal seasonal pattern,” but other forces are in effect as well, such as progress in dealing with Covid-19 and uneven progress in pandemic rental assistance reaching tenants and then landlords.
Apartment List as well cited seasonality as a possible explanation, but it’s unclear whether previous rent growth rates will return to match their robustness last year. Year-over-year rent growth in January during 2018 to 2019 was 3.2% and between 2019 and 2020 it was 2.3%. The number dropped to -1.4% in 2020 to 2021.
“In contrast, from last March through September, all 100 of these cities saw rents grow virtually uninterrupted, and some cities were experiencing month-over-month growth topping five percent,” Apartment List noted. “Consistent with this environment of cooling rent growth, our national vacancy index is also continuing to gradually tick up, indicating that the tight market conditions that characterized 2021 are easing, albeit slowly.”
This year, of the nation’s hundred largest cities, 41 saw rents actually fall. New York City, with the largest growth between January 2021 and January 2022, saw estimated rent growth of 33.5%. But the figures are still only 4.4% higher than in March 2020, showing that high growth was often getting back to normal.