US apartment rent growth slows, supply rises in 2023

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Apartment rents in the United States have seen a slight increase in the past few months, driven by stronger spring activity. However, in March 2023, they were only up 2.6% from March 2022, marking the smallest annual gain since April 2021. This is according to a report by Apartment List, which suggests that rent growth is now slightly below the pre-pandemic average of 2.8% after last year’s record-setting pace. Moreover, some markets, such as San Francisco, are experiencing a bigger drop.

The report also shows that vacancies are starting to rise back to normal levels, standing at 6.6% in March 2023, up from 6.4% in February. Over 917,000 apartment units were under construction across the country at the end of 2022, according to RealPage Market Analytics, which will increase the nation’s existing apartment base by 4.9%. This is the highest number of units under construction since the early 1970s.

Researchers at Apartment List note that even if demand continues to strengthen, a robust supply of new inventory hitting the market this year should keep prices in check. They expect 2023 to be a year of modest positive rent growth.

Markets seeing the biggest rent jumps compared to a year ago were mostly in the Midwest, with Chicago, Indianapolis, Cincinnati, and Louisville all up 6%. Boston rounded out the top five, also up 6%. However, several major cities are seeing rents decline, with Phoenix and Las Vegas rents down 3% year over year, and San Francisco dropping 1%.

Rents for single-family homes are also easing, but are still far hotter than apartment rents. Single-family rent growth was 5.7% year over year in January, the lowest rate of appreciation since spring 2021, according to CoreLogic. Of the 20 major markets tracked by CoreLogic, Orlando, Florida, had the highest rent gain from a year ago at 8.9%, but that is down from its latest peak of 25% annual growth in April 2022. Miami was seeing 39% annual growth last January, but that’s down to about 7% this year.

Molly Boesel, principal economist at CoreLogic, expressed concerns over affordability as annual rent growth for lower-tier properties was about three times the pre-pandemic rate, while gains in the highest tier were nearly one-and-a-half times during the same period.

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  1. Olick D. Rent growth drops back to pre-pandemic levels, but some markets are falling much harder. CNBC. Published March 28, 2023. Accessed March 29, 2023. https://www.cnbc.com/2023/03/28/rent-growth-drops-to-pre-covid-levels.html
  2. Apartment List – Create your renter profile. www.apartmentlist.com. Accessed March 29, 2023. https://www.apartmentlist.com/quiz?verified=true&amp
  3. Real Estate and Property Management Software. RealPage. Accessed March 29, 2023. https://www.realpage.com/