Yardi: Rent Growth Drops to 2.0% YOY in April
May 4, 2017 | by Mary Salmonsen | Multifamily Executive
The average U.S. multifamily rent rose by $3 in April, reaching $1,314, according to Yardi Matrix’s monthly survey of apartment markets. At the same time, the national rent-growth rate has slowed to below long-term growth trends. Rents rose by 2.0% in April on a year-over-year (YOY) basis, down 50 basis points (bps) from March. This represents a significant drop from the 5.5% rent growth seen a year ago.
The Matrix Monthly report has long anticipated this deceleration, given the rapid increase in new apartment supply and the unsustainable rent growth in some metros. The current rate of growth is more in line with historical growth rates, however, and with current wage growth, according to Yardi. At the moment, rents have peaked above the level of affordability for the average resident.
New-unit delivery is at a cyclical high, with over 363,000 units expected to come on line this year. Roughly 80% of these units serve the “Lifestyle” renter segment, defined by Yardi Matrix as properties aimed at high-income households that choose to rent despite having enough wealth to own. Much of the unit demand rests in the “Renter by Necessity” (RBN) segment, with middle-income renters who demand market-rate properties. Nationally, RBN property rents have increased by 3.3% YOY, while Lifestyle property rents have increased by 0.7%. New supply is expected to decline in 2018–2019.
