Midwest Moves to the Top in Apartment Performance

New apartment supply volumes and rent cuts in parts of the country rather than price increases have come together like a perfect storm to give the Midwest region a sizable lead in apartment growth performance, according to RealPage. 

In fact, effective asking rents in the Heartland were up 3.1% in the year-ending August 2023 with year-over-year net inventory growth in 2023 up 1.4%. Those numbers lagged a bit from the area’s decade average, but it was significantly ahead of what’s happening in other regions nationwide where annual rent cuts are occurring.

There’s one additional exception. In the East, what is happening is also different than in most other regions nationwide where they are logging annual rent cuts. However, in the East, the growth is more moderate than in the Midwest at 2.5% and the Y-o-Y net inventory growth is up 1,2%. Again, it is because of an increase in completed apartments

But elsewhere, the other regions are finding that new deliveries weigh down on pricing power versus the Midwest and East Coast where they are “swelling,” according to RealPage but at a slower pace and giving operators what it also terms “some breathing room.”

But looking at some of the other markets elsewhere gives a clearer national snapshot. In the Carolinas, Y-o-Y effective asking rent change as of August 2023 is -0.5% and its Y-o-Y net inventory growth is 3.6%. In the Mountains/Desert area, the effective asking rent change was -2.1% and Y-o-Y net inventory growth was 3.2%. In Florida, Y-o-Y effective asking rent growth was 0.7% and its Y-o-Y net inventory growth was 3%. In the Southeast, the Y-o-Y effective asking rent change was -0.2% and its Y-o-Y net inventory growth was 2.6%. In Texas, the Y-o-Y effective asking rent change was -0.3% and the Y-o-Y net inventory growth was 2.2%. Finally, on the West Coast, the Y-o-Y effective asking rent change was -0.8% and its Y-o-Y net inventory growth was 1.1%.