Multifamily Holds Strong in First Half of 2018

At the halfway point of 2018, the U.S. multifamily market has held strong despite projected hurdles in the form of elevated supply levels, decelerated rent growth, and lack of affordability in major metros. As of June, the national average rent has risen to an all-time of $1,405 and year-over-year rents are up 2.9%, a 20-basis point jump from May.

With rents increasing by $29 in the second quarter, it is the highest quarterly rent growth percentage (2.1%) since the second quarter of 2015 when rents grew by 2.3%. The strong showing from the multifamily market should temper some fearful projections of decelerated rent growth turning into flattened or regressive rates after the peak years of 2015 and 2016.

The spring season is not a stranger to seeing elevated rent growth and is not necessarily a reliable indication of future trends but considering the doubts and reservations of the multifamily market’s strength entering 2018, the first-half numbers for the year are reassuring.

From a market standpoint, Orlando continues to lead the nation with 7.4% year-over-year rent growth. Markets in the Southwest such as Las Vegas (6.5%) and Phoenix (5.0%) have experienced rent growth as southern and western Californians look for more affordable living costs. Tech-based markets like Seattle, Denver, and  San Francisco rebounded with favorable rent growth in the second quarter of 2018 after experiencing some sharp deceleration in previous quarters. View the chart above to see how job growth, occupancy rate, rent growth, and supply levels are interacting with each other.

*All statistics are credited to Yardi Matrix

 

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Projected Strong Market Performance Despite Higher Interest Rates

 

Despite a tightening cycle resulting from increased interest rates and high supply levels, Yardi Matrix is projecting the multifamily market to remain strong through the 2018 Spring season.

These projections are largely based on the strong growth of the nation’s economic growth, positive demographic drivers, falling unemployment rates, high job growth, and increased consumer confidence levels.

In a recent article for Multifamily Executive, author Mary Salmonsen provides a detailed breakdown of Yardi Matrix’s U.S. Multifamily Outlook for Spring 2018 and highlights the positive takeaways in a tightening cycle.

Click here to read the U.S. Multifamily Outlook for Spring 2018 breakdown in its entirety.