Absorption increased this summer in many secondary metros; high-priced gateway markets like Chicago, Los Angeles and San Francisco have a rougher go
SANTA BARBARA, Calif., Oct. 14, 2020 – Apartment demand is rebounding in the third quarter in many U.S. metros, a good sign for the industry after a weak first half of 2020, states the latest multifamily market report from Yardi® Matrix.
Increased absorption in July and August was led by many secondary metros in the Southeast and West – including Dallas, Denver, Atlanta, Phoenix and Charlotte – resuming the strong demand that those markets experienced over the last decade until March of this year.
But it’s a different story for high-priced “gateway markets” like San Francisco, Chicago, Los Angeles and San Jose, which are seeing more renters moving out than other cities and will likely have longer and more challenging recoveries as a result.
“The study of 17 million apartment units in Yardi Matrix’s database demonstrates that rent growth so far this year has been closely tied to the overall expense of apartments by market. Metros with higher average rents generally saw negative growth while rent growth in less expensive metros was modestly positive or flat. That is consistent with renters being more budget conscious at a time of economic hardship,” states the report.
And there are still cautionary signs that things could move backwards, depending on what happens with the number of virus cases this fall. “Multifamily performance will suffer if unemployment remains high and consumers feel uncertain about their prospects,” notes the report.
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