Apartment Rents Cooled In December After An Eye-Popping Year

Apartment rents cooled in December, marking the first decline last year for a sector that’s enjoyed record growth as of late.

Apartment List’s national rent index fell by 0.2% last month, a slump analysts say is notable after the 17.8% aggregate increase the sector posted in 2021. Rents are now $1,309 per month on average. By contrast, annual rent growth averaged a mere 2.3% in the calendar years spanning 2017 through 2019.

December marked the fifth straight month of slowing rent growth nationally after a peak in July, according to Apartment List.

“A slowdown during the fall and winter is typical due to seasonality in this market, but the current slowdown is capping a year that has been characterized by unprecedented price increases,” Apartment List analysts write in a recent report breaking down the December index, noting that December rent growth “fell in line with pre-pandemic trends.”

Rents also fell in December in 61 of the 100 largest cities, with Seattle and San Francisco showing significant month-over-month declines Apartment List experts say signals the tech hubs are “entering a second phase of COVID-related rental market softness.”

“Rent declines have occurred in a wide variety of places,” the report notes. “Prices have dropped for three consecutive months in some of the smaller cities that saw massive influxes of new residents throughout the pandemic, including Boise, Fresno, and Reno.”

The firm also has observed similar price drops in larger urban centers like Boston, San Francisco, and Chicago.

New York, Tampa, St. Petersburg, Scottsdale, and Irvine led the country in fastest rent growth last year, with each metro posting gains of at least 30%.  On the flip side, Oakland, Minneapolis, Detroit, Des Moines, and Cleveland had the slowest annual growth.

Despite this, experts say multifamily’s growth story is hardly over.

Earlier this fall, Jeff Adler, VP of Yardi Matrix said he predicts another 18 to 24 months of sustained rent growth nationally. Adler also noted that inflation has not yet worked into rents yet, which could help to boost growth. 

For investors, “it’s a great time to be in multifamily,” he said.