Apartment Market 'Deteriorating' According to New Data
Asking rents snap a 20-month run of sequential rent increases.
The run of 20 consecutive months of apartment rent growth has ended, according to a report this week from Apartments.com – a CoStar Group company.
It went as far as saying in its release that this “paints the most striking picture of the deteriorating rental market.”
Its August 2022 trends report stated that “the market finally witnessed negative asking rent growth on a monthly sequential basis from July to August, with rents down 0.1% in July.”
Jay Lybik, National Director of Multifamily Analytics, CoStar Group, said in prepared remarks, “We’re seeing a complete reversal of market conditions in just 12 months, going from demand significantly outstripping available units to now new deliveries outpacing lackluster demand.”
CoStar’s report showed a continuation of year-over-year rent growth, albeit at a slower pace, with asking rents falling to 7.1% in August, down from 8.4% at the end of July.
Lybik said that the spring and summer leasing periods came up “significantly short” compared to pre-pandemic historical results.
A separate report from Yardi Matrix found that the average apartment asking rents decreased for the first time in 2022, dropping by $1 to $1,718.
“Rent growth tends to slow in the fall, but this year comes at the tail end of the unprecedented increases. The deceleration in August was strongest in many of the markets that have had the most growth over the past two years, a sign that affordability is becoming an issue,” states the report, which also notes It’s possible that deceleration could continue for the remainder of the year.