Rent growth is expected to return to more predictable trendlines this year
SANTA BARBARA, Calif., Jan. 18, 2023 – Multifamily rent growth began to slow in late 2022 as economic pressures, including the impact of inflation, took root. The 2023 Multifamily Outlook from Yardi® Matrix expects that rent growth will be closer to its historical average in 2023.
Last year, U.S. rents increased by 6.4 percent after peaking near 16 percent in 2021, according to Yardi Matrix. Those were record figures, the highest seen in a century. The 2022 increase is expected to drop by half this year.
“All eyes are on interest rates and how quickly inflation recedes. Economic growth will likely wane in the second half as the impact of rapid rate hikes take effect,” states the outlook. “This year we foresee rent growth dropping in half to 3.1 percent as demand lessens and deliveries remain high.”
Demand is decreasing due to less renter migration, a dip in new household formation and declining affordability. Meanwhile new units are coming online nationwide. The forecast calls for 440,000 new deliveries in 2023, a stock increase of 2.9 percent.
Deliveries will be concentrated in fast-growing markets, including Dallas, Austin, Charlotte, Nashville and Orlando. However, starts are expected to decline due to rising construction costs, a shortage of construction workers and planning/permitting delays.
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