Despite the construction of new apartments in pandemic boomtowns, Yardi Matrix’s Multifamily Research Bulletin reports strong rent growth in many midsize markets in the Midwest, Northeast and South.
A large influx of supply is causing stagnant or falling rents in markets that saw explosive growth over the pandemic. Almost all of the 20 markets with falling rents are in Florida or Texas, and other high-growth pandemics are also seeing lower average asking rents than at the start of the year in markets like Atlanta, Raleigh-Durham, Austin, and Salt Lake City.
A solid growth in asking rents has been observed in the secondary markets mentioned above.
Albany, N.Y., Milwaukee, Worcester–Springfield, Mass., Louisville, Ky., Chicago, Des Moines, Iowa, and Des Moines, Iowa are the top secondary markets with rent growth over 2% so far this year. Richmond, Va., Madison, Wis., Portland, Maine; Pittsburgh, Pennsylvania; Providence, R.I. ; Virginia; Scranton–Wilkes–Barre, Pa.
No change in outlook for the year
There has been little change in our outlook for the year. Semmes writes in the report that “markets with lots of supply will continue to struggle this year to realize gains, but that is only a supply issue, and once those new units are absorbed, they will be back in good shape.”
Rates are expected to remain at their current level for a longer period of time than originally anticipated by the Federal Reserve. A small downturn is also possible later this year.
Lastly, rental growth next year will be stronger than this year, and it is likely to continue to grow in 2026 as well, since it will take some time for the Fed’s eventual rate cuts to meaningfully impact consumer demand and for the current influx of supply to be fully absorbed.