Multifamily Rents To Moderate in 2022
YardiMatrix predicts that rents will still remain elevated, with gains of around 4.8% over the course of the year.
Multifamily rent growth is expected to moderate in 2022, after a year in which national asking rents were up 13.5%.
New research from YardiMatrix predicts that rents will still remain elevated, with gains of around 4.8% over the course of the year. Demand is also expected to remain robust, as job and wage growth will likely remain high.
“Consumer balance sheets are healthy, which provides the financial wherewithal to create distinct households and pay higher rents,” the report notes. “Some households will continue to be frozen out of homeownership by house prices, which increased by 20% in 2021. Mortgage rates are likely to rise in 2022, which also makes renting more competitive. Plus, the ongoing migration of population to secondary and tertiary markets in the South and West will funnel demand into areas that have grown rapidly in recent years.”
But several factors will restrain rent growth, according to Yardi. Most of the pent-up demand from 2020 was expended in 2021, analysts say, and inflation will continue to loom large as rents and other expenses rise faster than wages. And COVID will remain a “wild card,” and a potential limitation to economic growth and mobility.
Most of 2021’s rent growth was driven by affordable secondary markets across the Southeast and Southwest, including the Phoenix, Tampa, Jacksonville, and Orlando metros.
“Residents moving between metros looking for more cost-effective options and more value for their dollar have exacerbated what had already been a significant boost for Sun Belt metros, which will continue to drive rent improvement in these markets, albeit at a more sustainable rate than in 2021,” the report said .The Southeast will continue to rank high on Yardi’s 2022 rent forecast, led by Tampa (6.6% growth), the Southwest Florida Coast (also at 6.6%), Raleigh-Durham (6.5%), Atlanta (6.2%) and Orlando (6.1%).
The Bay Area is also expected to rebound, with rents predicted to ramp up 6.5% in San Francisco and by 5.5% in San Jose. Both cities are among the six metros nationally tracked by Yardi that declined during the pandemic. Other cities across the West that top Yardi’s 2022 rent predictions include Las Vegas (6.5%), San Diego (6.4%), Phoenix (6.2%), the Inland Empire (6.1%), Sacramento (6%), Los Angeles (5.6%) and Salt Lake City (5.6%).
“Major secondary markets will continue to perform well, but more sustainable growth will be the name of the game in 2022, as the rental market settles,” the report states.