Apartments.com Publishes Q3 2022 Rent Growth Report
Today, Apartments.com – a CoStar Group company – released an in-depth report of multifamily rent growth trends for Q3 2022 backed by analyst observations. The report highlights the stark reversal of fortune across the multifamily market, including rent decreases in the largest markets, major slowdowns across the Sunbelt and increased unit deliveries despite wavering demand.
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20221004005675/en/
Year Over Year Rent Growth, by Market -- 3Q 2022 (Graphic: Business Wire)
“After four quarters of supply additions outpacing demand, the market is shifting with national asking rents declining over the last 90 days by 0.4%,” said Jay Lybik, National Director of Multifamily Analytics, CoStar Group. “As a whole, the multifamily sector witnessed a disappointing peak leasing season and with an estimated 110,000 new units set to deliver in Q4, all signs point to rent growth slowing even faster than initially projected by the end of the year.”
YEAR OVER YEAR REMAINS POSITIVE, BUT RAPID SLOW DOWN EXPECTED
Throughout the third quarter, national asking rents declined by $7 or 0.4% from $1,641 to $1,634 and national vacancy jumped 30 basis points, settling at 5.4% at the end of September. Absorption continued to remain positive, but with only 64,000 units newly occupied, the pace of newly delivered units was double at 120,000 units, reflecting a huge shift in market conditions from just a year ago when demand significantly outpaced supply.
While year over year asking rents remained positive at 5.8%, they retreated by 360 basis points over the third quarter, showing signs of a slowdown.
MIDWEST, CALIFORNIA MARKETS AMONG TOP RENT GROWTH, SUNBELT DROPS BEHIND
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Sunbelt markets have maintained a strong presence on the year over year rent growth markets list, holding five of the top 10 positions. Interestingly, the third quarter brought a few surprise cities into the mix with Indianapolis and Cincinnati breaking the top 10 for the first time ever. Additionally, California markets San Diego and San Jose continued to be part of the conversation.
On the reverse, the Sunbelt region also holds some of the largest rent growth declines in the past three months, with eight of the top 10 markets located in this area. Palm Beach led with year over year asking rents decreasing from 16.4% in Q2 2022 to just 4.6% at the end of September. Just behind is Las Vegas with year over year rents dropping 900 basis points in 90 days to 3.0%. Orlando witnessed a similar 900 basis point decline in rents but remained above 9.0%.