Forecast Adjusted

Market corrections in Florida and California contributed to a month-over-month increase of average asking rents nationally by 41 basis points in May, states the latest Multifamily Forecast from Yardi Matrix.

Market corrections in Florida and California contributed to a month-over-month increase of average asking rents nationally by 41 basis points in May, states the latest Multifamily Forecast from Yardi Matrix. 

It was a decrease from the 44-basis-point MoM increase recorded in April and was prompted by actual decreases in asking rents in two regions: Florida markets that saw unbelievable growth during the pandemic and now face affordability problems, and California cities still struggling to find their post-pandemic footing.

Five of the 10 worst-performing markets were in Florida (Southwest Florida Coast, Miami, Orlando, Jacksonville and West Palm Beach), and of the remaining markets that saw month-over-month declines, six were in California (metro Los Angeles, Sacramento, Eastern Los Angeles County, the East Bay, Orange County and the Inland Empire).

Strong growth continues in many Midwestern and Northeastern markets: Portland, Maine, and Scranton–Wilkes-Barre both grew more than a full percentage point month-over-month. White Plains, Detroit, Urban and Suburban Chicago, Manhattan, Milwaukee, Rochester, Central New Jersey and Syracuse all saw asking rents grow more than 90 basis points from the previous month.

The average apartment asking rent nationally was $1,726 in June, according to the Yardi Matrix National Multifamily Report.

The update forecast lowers rent rate expectations for many larger markets in the West and Southwest and raises them for many midsize markets throughout the Midwest, Northeast and parts of the South.

“The stalled-out return-to-office movement is putting a significant drag on Western markets with large numbers of knowledge-based workers, and economic uncertainty will continue to limit demand in those markets that have largely been driven by high-paying tech jobs,” states the report.

As for those cities whose outlook improved: “As affordability continues to be a concern across the country and economic uncertainty prevails, these smaller markets will continue to be more attractive, as they can provide many of the same benefits and amenities their larger siblings do at significantly lower price points.”

Yardi Matrix offers the industry’s most comprehensive market intelligence tool for investment professionals, equity investors, lenders and property managers who underwrite and manage investments in commercial real estate. Yardi Matrix covers multifamily, student housing, industrial, office and self storage property types. Email [email protected], call (480) 663-1149 or visit yardimatrix.com to learn more.

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AUTHOR

Leah Etling is the founding editor of the Balance Sheet and a 12-year Yardi employee who also oversees press releases and social media. An award winning journalist, she holds a master's degree from UC Berkeley and is a native of Santa Barbara County, Yardi's home.

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