Another Month of Negative Multifamily Rent Growth

According to Apartment List, November marks the fourth month that multifamily properties have seen negative growth in the national median rent: down 0.9% month over month to $1,340. Low demand during the holiday season likely means that rent growth will continue its downward path for another month or two.

Year-over-year growth is at -1.1%. “This stands in sharp contrast to the prevailing conditions of 2021 and 2022, when rent prices were surging and year-over-year growth peaked at 18 percent nationally,” Apartment List wrote. “But despite this cooldown, the national median rent is still nearly $250 per month higher than it was just three years ago.”

The national vacancy rate is 6.4%, slightly higher than in pre-pandemic times. This is unlikely to change in the near future given the large volume of apartment units still being built. However, construction levels depend on local markets, not national ones. There will be high variability in the coming year, with some metros facing significant gluts, as GlobeSt.com previously reported.

“Regionally, rents fell in October in 89 of the nation’s 100 largest cities, and prices are down year-over-year in 68 of these 100 cities,” the company wrote. “The sharpest rent declines over the past year are concentrated in California markets like Oakland, San Francisco, and Long Beach, where apartment demand remains sluggish.”

Going back to 2017, November’s decline was the second largest Apartment List had seen. “The only time that November brought a sharper decline was last year, when rents fell by 1.1 percent as the market shifted into the period of sluggishness that still persists,” they wrote. “For comparison, from 2017 to 2020, November declines averaged 0.5 percent.”

The fastest rent growth is in the Midwest and Northeastern markets. Over the past 12 months, the metros with the largest rent growth have been Providence (4%), Milwaukee (4%), Louisville (4%), Chicago (3%), Oklahoma City (3%), Hartford (3%), Boston (3%), New York (3%), Washington, D.C. (2%), and Indianapolis (2%).

The slowest rent growth was in Austin (-6%), Portland, Ore. (-5%), San Francisco (-4%), Phoenix (-4%), Atlanta (-4%), Orlando (-4%), Raleigh (-4%), Jacksonville (-4%), San Antonio (-3%), and Salt Lake City (-3%).

Vacancy rates have returned to above pre-pandemic levels. “The price fluctuations that have rocked the rental market over the past three years are largely attributable to changes in the balance between the number of vacant apartments available and the number of renters looking to move into them,” they wrote.