These Apartment Markets Poised to Withstand Incoming Supply
Markets where supply is more reasonable and less drastic will have an advantage
As a torrent of new apartments floods many U.S. markets, the question arises: which markets will best survive the inundation/?
The 670,000 units expected to come online this year will far exceed the previous record of 440,000 that poured in in 2023. But supply will not be the only determinant of which metros benefit and indeed, it many areas it could prove to be a negative. Factors like job growth and consumer sentiment are far more important.
“Markets where supply is more reasonable and less drastic will have an advantage,” according to a study by RealPage Analytics. The study tips its hat in favor of Boston, Chicago, Cincinnati, Cleveland, Columbus and New York as the biggest winners. Each saw occupancy rise above 94% in 2023 with changes in annual effective asking rents well above national levels, while construction was “reasonable” and only a modest supply hike expected in 2024.
Houston, San Diego, San Jose and in particular Washington, DC could also get a boost.
Anticipated new supply in DC is likely to be concentrated in a few key submarkets – but one-third of all its submarkets will see no new construction.
Some Western markets could potentially see higher demand, including Las Vegas, Los Angeles, Portland, San Francisco and Oakland. In 2023 these metros experienced rent cuts and not much new supply is anticipated.
Other markets show solid demand, but rent growth is expected to be limited by an influx of new inventory. These areas include Austin, Charlotte, Dallas/Fort Worth, Nashville, Orlando, Phoenix and Salt Lake City. Metros like Atlanta, Miami, Newark, Seattle and Tampa could surprise.