Multifamily asking rents have finally started to cool after nearly two years of consecutive rent growth. According to a new report from Apartments.com, the streak of monthly growth of asking rents, dating back to December 2020, was finally snapped this summer. From July to August, average asking rent prices decreased 0.1 percent. “We’re seeing a complete reversal of market conditions in just 12 months, going from demand significantly outstripping available units to now new deliveries outpacing lackluster demand,” said Jay Lybik of CoStar Group, the parent company of Apartments.com.
Of the 40 largest markets in the country, only 13 posted asking rents that were positive or neutral. Nashville posted the largest drop with 1 percent, while on the flip side, Orange County, California had the highest jump, with asking rents rising 1 percent. Some cities that have been hot real estate markets over the last couple of years did not fare well in the report. Sunbelt cities made up the majority of markets that posted negative results, including Orlando, Austin, Fort Lauderdale and Charlotte. The region is home to six of the top 10 growth markets nationwide, but since posting some of the fastest growing rent numbers last year, are now experiencing a major slowdown.
While monthly growth is down, year-over-year rent growth is still trending positive. The three markets with the highest year-over-year asking rent growth were all in South Florida: Orlando, at 12.8 percent; Miami, at 12.4 percent; and Fort Lauderdale, with 11.1 percent. Florida has been a magnet for migration during the pandemic. Between July 2020 and July 2021, the state’s population added 211,305 new residents and major companies like Blackstone and Citadel have planted flags in the city’s booming office market. However, the report noted that the positive impression that year-over-year data gives doesn’t paint the whole picture of what’s happening in the multifamily market. “Major markets continue to retreat quickly at a time of year in which they should’ve posted their best results,” the report’s authors wrote.