July 27, 2021
The multifamily real estate market nationwide is experiencing a major boost overall with rent growth currently, according to Yardi Matrix. Simultaneously, many institutional investors are pouring dollars into building single-family projects, which is a shift away from the traditional mom-and-pop owners of multifamily properties. These factors are contributing to a shakeup in the traditional multifamily markets with an increased appeal for investors, builders, and brokers alike.
The Multifamily Firm combed through the different data points to summarize what’s going on currently with multifamily real estate across the country.
Key Data Points for Multifamily Real Estate Rent Growth in 2021
– Multifamily asking rents grew +6.3% year-over-year from June, 2020 to June, 2021. According to a National Report released by Yardi, it is the largest year-over-year growth since collecting data nationwide.
– Rent growth is also seen going up month-over-month with a +$23 / month increase nationwide tacked on to the average rent: $1,482 / month on average.
– Nine of the top 30 multifamily markets also witnessed double-digit rent growth year-over-year primarily due to increased migration to these regions.
– Historically rent growth is not able to continue at this rate over a prolonged period of time, but experts predict that it will continue over the coming months.
What’s Causing the Multifamily Rent Growth Nationwide?
The key factor contributing to the aforementioned multifamily rent growth data points is migration / population growth, especially in these locations:
– Phoenix Multifamily: +17.0% rent growth year-over-year
– Tampa Multifamily: +15.1% rent growth year-over-year
– Inland Empire Multifamily: +15.1% rent growth year-over-year
– Las Vegas Multifamily: +14.6% rent growth year-over-year
– Atlanta Multifamily: +13.3% rent growth year-over-year
Furthermore, the demand for apartments and single-family property rentals is shown by statistics month-over-month, as 28 of the 30 top multifamily markets have seen at least a 1% increase in rent growth.
Specifically the lifestyle rentals have grown faster than renter-by-necessity rentals year-over-year for the first time in a decade. This is due in large part to economic factors of the pandemic, which we expand upon in the next section.
The Pandemic’s Effect on Multifamily Real Estate
– Government stimulus checks along with bolstered unemployment benefits helped ensure rental payments across the board, despite many fears of renters defaulting on payments.
– Savings across the country went up to more than $2.5 trillion, as people were in lockdowns and didn’t have the leisure spending of traveling and other activities.
Institutional Investment Presence in Multifamily
Institutional investors are continuing to build on a trend of pouring money into the multifamily market, and this is seen with a new presence of build-to-rent developers who are building multifamily properties with the intention of directly renting out units as single-family homes.
According to Yardi Matrix, single-family rentals have generally been a large submarket (~33%) of 46 million rental homes in the United States. Most of these properties, nearly 98%, of these properties are operated by private owners, but institutional investors are increasing their presence in the market and have done so since the financial crisis in 2007 / 2008. In fact, around 12% of the new single-family construction projects this year are being done for rentals by institutions.
Conclusions for the Recent Multifamily Real Estate Trends
The current trends of positive, skyrocketing rent growth and an increased presence of institutional investors within the multifamily real estate market are respectively tied to the ongoing pandemic along with the financial crisis of 2007 / 2008. For the time being, rents will continue to grow; however, the question is how long will the momentum last? Furthermore, will more institutional players in the market cause other predictable or unforeseen changes in the market down the road?
Contact us, the experts at The Multifamily Firm for more insights or any inquiries you have about multifamily real estate in Tampa and Sarasota.