Multifamily rent growth is decelerating when compared to last year, with some Sunbelt cities seeing dramatic pullbacks, a new report says.
The Sunbelt’s hottest pandemic rental markets are chilling out.
The Sunbelt — a region that includes the Southeast and Southwest U.S. — hosted many of the country’s fastest-growing markets for multifamily rental units during 2021 and much of this year, according to a report released this month from Apartments.com, a CoStar Group CSGP, +0.10% company.
But sizzling prices in Palm Beach, which saw rent for multifamily units grow 30.6% in the fourth quarter of 2021 when compared to the year prior, cooled to 3.8% annual growth at the end of October. In 2023, multifamily rents there could even reach zero to -1% rent growth year-over-year, Jay Lybik, national director of multifamily analytics at CoStar Group, told MarketWatch.
Where are the biggest drops?
“We’ve seen a dramatic pullback in terms of the demand in multifamily this year … and a lot of the fast-growing Sun Belt markets that we saw last year also are seeing really large construction pipelines that are now delivering,” Lybik said. “It’s kind of a perfect storm in those markets in that demand is still positive, but it’s pretty low, and we’re delivering a lot of units.”
“It’s really pushed down rents pretty darn quickly,” he added.
Las Vegas, Tampa, and Phoenix have also experienced “rents retreating by over double digits so far this year,” Apartments.com said in its report.
Multifamily rent growth also declined from September to October, contributing to a three-month negative streak.
However, multifamily rents remained elevated when compared to October 2021— by 4.8%, down from September’s 5.7%.
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