Apartment Rent Growth Projections for the Next Five Years
It is poised to rise significantly from May’s 0.6% decline.
May 2023 saw U.S. year-over-year multifamily rent growth turn negative for the first time since the Global Financial Crisis of 2007-2008. The decline was -0.6%.
However, the data analytics firm Markerr’s outlook for the next five years was much more positive. It predicted that the top 100 markets in the USA will see a 3.9% increase in rent through 2024, and a 5% jump the year after, followed by more normal 3% to 1.5% growth in years three to five.
In dollar terms, this means average rent will rise from $2,103 a month this May to $2,453 in year 5.
In determining the rankings, Markerr takes into account factors like home prices, multi-family permits, single-family permits, rent, mean age, the share of population in the 25-34 year age group, and median income growth.
The region that fared best in the downturn was the Rustbelt, where year-over-year rent remained stable. Sunbelt markets had the lowest rent growth at -1.2% compared to the previous year.
Markerr predicts they will change places in the next five years, with Sunbelt and Tertiary market rent growth outperforming the top 100 average, while Rustbelt and Coastal markets will underperform. Winston-Salem, NC is projected to lead the nation with 5.9% compound annual growth rate (CAGR), with three Florida metros – Palm Bay, Deltona, and North Point – as the runners up.
The lowest rent growth through 2028 will be experienced in Los Angeles, with a CAGR of 1.9%, while Colorado Springs, Washington, DC, Portland and San Francisco will see CAGR of about 1.5%. The lowest rent growth among the metros studied will be in Salt Lake City, with CAGR of just 0.8%.
By Philippa Maister | July 24, 2023 at 08:40 AM
