For years multifamily developers and owners have flocked to the Sunbelt cities to invest, drawn by the region's fast-growing markets, great fundamentals and light regulatory touch. All that development, however, has taken a toll and this year, apartment rent growth in the Sunbelt markets is expected to be lower than that of Gateway cities, according to CoStar's estimates. 

Rent growth for gateway markets will be fairly low, coming in at 1.4% for the end of the year, Joe Biasi, strategic consultant at CoStar Advisory Services, tells GlobeSt.com. But Sunbelt rent growth will be even lower at 0.04% growth, he says. 

This downward slope in rent growth began in Q4, in fact, and investors responded immediately.  For the first time since 2015, Sunbelt multifamily transaction volume was lower at the end of the year in 2022 than at the start. "Investors are looking at these markets like Phoenix and Raleigh and see that their rent growth expectations have gotten turned on their head," Biasi says. "There is no rent growth and the exits don't look good either."