Multifamily rental growth update for May 2023

This analysis looks at the current rental growth trends for twelve multifamily markets across Texas, Arizona, Georgia, Tennessee, North Carolina, and Florida.

Rent growth

After experiencing wild swings in job growth and interest rates, the post-pandemic economy has settled into a very curious and confusing set of circumstances. Job growth and unemployment remain near all-time high levels which normally creates strong renter demand. Additionally, high mortgage rates are redirecting significant demand from would-be home buyers who, instead of purchasing, are choosing to rent and remain renters for longer periods of time. Still, what would normally be more than sufficient demand from these sources does not seem be enough to match the current massive wave of new deliveries. Though demand remains relatively steady at the lease-up level, there is a paradoxical mass exodus of tenants from all other apartment classes prompted by inflation.

Rent levels remain under extreme pressure. As of the end of May, ten of the 12 markets we serve are experiencing negative rent growth.

Figure A – Rent Growth Since Pandemic as of May 2023


Figure A demonstrates the rent growth that occurred each year since 2020. The value in the dark blue section at the bottom of each bar represents 2020 when rent growth was constrained due to the outset of pandemic and economic lockdown conditions. The light blue portion of each bar represents significant growth in 2021 due to the economic reopening that sent rents soaring. The top green portion of each bar represents 2022 rent growth, when rents were expected to revert to long-term averages but remained elevated well over anticipated levels. The values hovering over the top of each bar are the most current trends as of the end of May.

What this means for 2023

2023 is proving to be a challenging year as rent growth has turned negative in ten markets and remains very flat in Orlando and Houston. Although the negative-to-flat direction of these trends is concerning, we may still experience the traditional seasonal pivot where demand increases from now through July. However, pandemic-induced fluctuations are likely to continue sending shock waves through the established seasonal patterns we have come to expect. Stay tuned as we continue this series with updated reporting on market conditions for 2023.

Interested in learning more? View additional detail on rental rate, occupancy and absorption trends in our monthly Market Line Reports.

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