The supply boom in six key apartment markets has caught up with rent growth and there, especially in B-and C-class communities, 2023 was a year of rent cuts.
Making out the best in this negative environment were the Class A properties, according to a recent report from Julia Bunch at RealPage.
Those luxury units reported the least severe rent cuts compared to Class B and C units within the same market, the report said.
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The six-market collection comprised Austin, Phoenix, Dallas, Orlando, Salt Lake City, and San Antonio.
As such, all asset classes reported deepening rent cuts in every quarter of 2023 – with one exception. From Q3 to Q4 2023, Class A rent cuts maintained the same rate of annual rent cuts at 4.4%.
That Q4 reading in Class A product was the mildest rent cut seen across the price spectrum. Operators in Class B (-5.7%) and Class C (-7.9%) units cut rents more severely in Austin in 2023. Austin performed worst among the A properties with an annual decline of 6%. Phoenix cut rents by 4.3%, (1.9% in A), and Orlando's fell by 4% (2.9% in A)
Dallas' Class A rents were cut by just 0.4% in 2023 and Salt Lake City's were down 1.9%. San Antonio Class A units reported the least severe rent decline in 2023 at 1.7%.
More development is on the way, with these markets easily outpacing the national average for annual inventory growth of 2.3% in 2023 and the number of new units for 2024 will be higher with all six of these markets growing their total apartment inventory by at least 6%.
Austin tops that list – and the nation as a whole with a forecast of 11% growth this year.
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