January broke the five-month streak of negative month over month rent growth, offering hope that the market will soon return to equilibrium
Today, Apartments.com – a CoStar Group company – released an in-depth report of multifamily rent growth trends for January 2023 backed by analyst observations. For the first time in five months, month over month rent data showed positive growth, with Midwestern markets like Indianapolis and Cincinnati emerging as top rent growth leaders.
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Year Over Year Rent Growth, by Market (Graphic: Business Wire)
“While snapping the five-month negative rent growth streak is a positive start to the new year, it remains to be seen whether or not demand has truly accelerated,” said Jay Lybik, National Director of Multifamily Analytics at CoStar Group. “Year over year rent data continues to decline, highlighting the market’s weakening position. If the positive rent growth trend persists, year over year data may finally change its course, signaling supply and demand are closer to regaining equilibrium.”
YEAR OVER YEAR RENT GROWTH PICTURE
National year over year rents remained positive but fell to 3.2% in January from 3.6% at the end of 2022, pointing to overall unstable market conditions. Only four of the top 40 largest markets saw year over year asking rent expand in the month of January. However, the positive upward movement was only in the 10 to 30 basis points range, marking a small reversal in the overall weak rent growth trend.
INDIANAPOLIS, MIDWEST MARKETS HOLD TOP RENT GROWTH POSITIONS
Indianapolis continued its reign at the top of the rent growth list in January after claiming the spot at the end of 2022. Other Midwestern markets, like Cincinnati and Columbus, have emerged as top 10 rent growth leaders considering new supply additions have been less of a concern in these areas. A strong majority of Sunbelt markets have witnessed significant pullback in rents over the past year, except Florida hotspots Miami and Orlando.
On the other end of the spectrum, Las Vegas and Phoenix have both seen a dramatic slowing of growth, rounding out the bottom of the annual rent growth ranking. Both markets’ year over year asking rents have gone from the low 20% range in Q4 2021 to negative 1.0% at the end of January 2023. We’re closely monitoring Atlanta and Austin too, which have witnessed rents retreating by over double digits so far this year.
MONTH OVER MONTH RENT GROWTH DATA SNAPS NEGATIVE STREAK
For the first time since August 2022, sequential monthly rents rose, with a nationwide increase of $7 or 0.4%. One month does not represent a definite trend but does however show signs of hope that the overall downward rent growth movement could come to an end. Only two out of the 40 largest markets saw negative month over month rent growth. In absolute terms, Fort Lauderdale and Orlando rents increased the most in the past 30 days, both up $21 or 1.2% and 1.0% respectively.
Sunbelt markets comprised the majority of the worst performing rent growth locations, but they did start 2023 more dispersed across the rankings. One market we’re keeping a close eye on is Austin, which faces another year of record-breaking supply additions. The rental picture in Austin is not bright, with negative month over month rent declines at 0.1% and the largest year over year rent growth declines at 170 basis points to 1.7%.
The positive month over month rent data was a real surprise to kick off the new year. However, with a record number of units projected to deliver throughout 2023 and 13 markets poised for new supply records, continued positive upward movement in rent growth is not assured.
About CoStar Group, Inc.
CoStar Group, Inc. (NASDAQ: CSGP), a leading provider of online real estate marketplaces, information, and analytics in the property markets. Founded in 1987, CoStar conducts expansive, ongoing research to produce and maintain the largest and most comprehensive database of commercial real estate information. Our suite of online services enables clients to analyze, interpret and gain unmatched insight on commercial property values, market conditions and current availabilities. STR provides premium data benchmarking, analytics, and marketplace insights for the global hospitality industry. Ten-X provides a leading platform for conducting commercial real estate online auctions and negotiated bids. LoopNet is the most heavily trafficked commercial real estate marketplace online. Apartments.com, ApartmentFinder.com, ForRent.com, ApartmentHomeLiving.com, Westside Rentals, AFTER55.com, CorporateHousing.com, ForRentUniversity.com and Apartamentos.com form the premier online apartment resource for renters seeking great apartment homes and provide property managers and owners a proven platform for marketing their properties. Homesnap is an industry-leading online and mobile software platform that provides user-friendly applications to optimize residential real estate agent workflow and reinforce the agent-client relationship. Homes.com offers real estate professionals advertising and marketing services for residential properties. BureauxLocaux is one of the largest specialized property portals for buying and leasing commercial real estate in France. Business Immo is France’s leading commercial real estate news service. CoStar Group’s websites attract tens of millions of unique monthly visitors. Headquartered in Washington, DC, CoStar Group maintains offices throughout the U.S., Europe, Canada, and Asia. From time to time, we plan to utilize our corporate website, CoStarGroup.com, as a channel of distribution for material company information.
Apartments.com is the leading online apartment listing website, offering renters access to information on more than 1,000,000 available units for rent. Powered by CoStar, the Apartments.com network of sites includes Apartments.com, ApartmentFinder.com, ApartmentHomeLiving.com, Apartamentos.com, WestsideRentals.com, ForRent.com, ForRentUniversity.com, After55.com and CorporateHousing.com.
Apartments.com is supported by the industry's largest professional research team, which has visited and photographed over 500,000 properties nationwide. The team makes over one million calls each month to apartment owners and property managers, collecting and verifying current availabilities, rental rates, pet policies, fees, leasing incentives, concessions, and more. Apartments.com offers more rental listings than any other apartments website, and innovative features including a drawing tool that allows users to define their own search areas on a map, and a "Travel Time" feature that lets users search for rentals in proximity to a specific address. Apartments.com creates easy access to its listings through a responsive website and iOS and Android apps and provides unmatched exposure for its advertisers through an intuitive name, strategic search engine placements and innovative emerging media.
The Apartments.com network reaches millions of renters nationwide, driving both qualified traffic and highly engaged renters to leasing offices.
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