Are Households 'Trading Down' To Class B and C Properties?

Even without a recession, stagnating incomes and a softening labor market may be enough to push some renters into Class B and C properties — particularly as Class A rents and single family prices continue to skyrocket in many US metros.

A recent analysis by Moody’s Analytics CRE notes that Class B and C rent growth outpaced Class A in the first half of the year, and in Q1 Class B and C absorption was greater than Class A for just the second time in the more than two decades Moody’s has tracked the data. Economists examined data from the the 11 quarters defined as recessionary by the NBER since 1999 and found that Class B and C rent growth outpaced Class A eight of those quarters, or 73%. In expansionary periods, that was the case in just 25 of 77 quarters (32%).