Multifamily Rents Continue To Soar

Multifamily asking rents defied expectations by ticking up yet another $10 in February to hit a national average of $1,628, according to the latest numbers from Yardi Matrix. Year-over-year growth also posted a 15.4% increase.

Single family rentals also flew past prior records, with rents increasing by nearly 15% year over year through February. The market “continues to surprise,” with 90% of the 30 metros Yardi tracks showing double digit rent growth year over year.

Miami leads with a 27% increase in rents year over year through February, and asking rents increased by 20% or more in eight of the top 30 metros Yardi tracks.  And yes, rents also ticked up in San Francisco, by 9%.

Yardi notes there are signs younger workers are returning to city centers: New York posted the biggest increase in the top 30 metros—up 2.9% year over year—which led to a 17.6% increase in asking rents.  San Jose and Chicago are also impacted by this return of young workers, albeit more conservatively.

“Rent growth is likely to start decelerating soon relative to the big increases that began in March 2021, but demand shows little sign of slowing,” Yardi’s analysts note. They add that the sustained growth also underscores America’s long-term housing supply shortage: single-family home prices jumped 18.8% in 2021, according to the S&P Case-Shiller Index, and as of January 2022, occupancy rates were 95.0% or higher in 28  of the top 30 markets.

Nationally, occupancy rates are up 120 basis points year-over-year, with increases especially strong in Texas and Florida as well as in gateway cities like New York, San Jose, and Chicago that lost residents during the pandemic. Occupancy has been sluggish in just a handful of major metros, including Phoenix, Sacramento, and the Inland Empire, as well as Las Vegas.  But those metros have all also shown “exceptional” asking rent growth, and renters continue to stream in from other more expensive cities.