Apartment rents grew 0.6% year over year in March, offering another indication that the multifamily market is in full recovery mode after nearly a year of COVID-related struggles.
Overall rents increased by $6 to $1,407 nationwide, closing the first quarter in robust fashion, according to Yardi Matrix. The whole three-month period, in fact, represented one of the strongest first quarters in a few years, Yardi analysts noted. Rents were up 0.8% in Q1 2021 from the previous quarter; compare that to the first quarter of 2020, when the pandemic’s economic impacts were just beginning to coalesce and rents rose just 0.1%.
The year-over-year rent growth is led by lower-cost markets in the West and Southeast, beneficiaries of inbound migration from more expensive coastal, tech hub and gateway cities nearby. California’s Inland Empire continues to lead all markets in annual rent gains, with rents up 8.3% in March from the same month one year prior. The South is led by Tampa (5.0% year-over-year rent growth) and Atlanta (4.7%), with the two cities aided not only by inbound renters but also by limited new supply. Completions in Tampa in the past 12 months, for example, have totaled just 2.3% of stock, while Atlanta’s completions over the same timeframe have totaled only 2.5% of inventory.
Of the nation’s top 30 rental metros, 19 had flat or positive year-over-year rent growth during March. The pricey cities losing outbound renters, meanwhile, continue to see negative year-over-year rent growth. Los Angeles, Chicago, Boston, Washington, D.C., Seattle, San Francisco, San Jose and New York all saw rents down at least 2.0% on a yearly basis last month. In the case of the latter four cities, rents are own more than 7.5% year over year. Even those cities, however, are seeing signs of slowly turning a corner.
Rents in San Jose and New York, in particular, appear to have bottomed and are now starting to trend upward again. Notably, rents in San Jose grew 0.9% month over month. That’s the second-best monthly improvement of the 30 top markets, suggesting a strong turnaround ahead for the Bay Area city. Nationally, rents increased by 0.4% month over month, a 20-basis point gain from February.
Yardi expects more improvement on the horizon, with the broad rollout of vaccinations continuing to help the economy rebound and federal support helping boost many households’ finances. The two most recent aid packages have injected a combined $50 billion in emergency rental assistance and other support to the housing industry, which Yardi projects will buttress occupancy and rent growth throughout the rest of the year.
Of the top 30 markets, just one — San Francisco at -0.8% — is forecast by Yardi to have negative year-over-year rent growth at the end of 2021.
“As the pace of vaccinations continues to ramp up and cities continue to reopen, the multifamily market is poised for a strong 2021,” Yardi analysts said.