Multifamily rents are falling as fewer households move and recession fears mount — and one industry expert predicts the balance of power between landlords and tenants will continue to change in turn.
Apartment List’s national rent index saw prices fall 0.8% over December, bringing the national median rent price down $43 from its 2022 peak.
“It’s actually typical to see prices fall a bit this time of year and that’s because rental market activity tends to slow down in the winter months as fewer households move,” says Apartment List Sr. Housing Economist Chris Salviati. “And so property owners who have vacant units to rent will often offer modest discounts in order to spur demand. That said, the declines that we’ve been seeing recently go above and beyond just that seasonality alone.”
October, November and December rank as the three sharpest month over month declines in the history of Apartment List’s national rent index going back to 2017. The national median rent increased by 3.8%, less than one-forth of the 17.6% growth rate observed in 2021.
According to Salviati, the slowdown is happening across the country, with prices falling in 90 of the 100 largest markets Apartment List tracks. New York City led the declines, while the Midwest led the US in fastest rent growth.
“On the demand side, we’re seeing that households are starting to tighten their belts in response to rising prices and fears of a possible 2023 recession,” Salviati says. “And on the supply side, we’re now starting to see vacancies open back up in existing apartment properties at the same time we’re seeing a sizable number of new apartment properties hit the market.”
And as more multifamily projects deliver in 2023, landlords will be fighting for renters — not the other way around, he says.
“The days of skyrocketing rent prices are solidly behind us,” Salviati says. But at the same time, he doesn’t predict a significant decline in prices, either.
“Our best guess is that prices will remain relatively flat at the national level this year, albeit with significant volatility in certain markets,” he says. “That said, there is potential that prices could continue falling this year, particularly if we do enter a recession.”
Source: “Apartment Landlords Could Start Fighting Over Renters This Year“