Rent Growth is Cooling Off but Not By Much!

Rent growth is cooling off a bit for both apartments and single-family rentals. New data from Yardi Matrix shows that national rent growth declined slightly in August. That could be a sign of the housing market slowdown, but for landlords who are worried about their ROI - the year-over-year rent growth is still close to 10% for both asset classes. (1)

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Yardi data shows that average asking rent for single-family homes was down $2 a month in August, to $2,090. The year-over-year growth percentage was 9.5% or about 170 basis points less than July. In July, rents were up an average of $7 a month for an annual growth rate of 11.2%. So you can see, single-family rent growth has pulled back a little, but it’s still showing strong growth. (2)(3)

For apartments, the average asking rent was down $1 a month in August, to $1,718 with a year-over-year growth rate of 10.9%. That’s also 170 basis points lower than July, and is down from an annual rate of 12.6%.

In Yardi’s most recent report, analysts say: “Rent growth tends to slow in the fall, but this year comes at the tail end of unprecedented increases. The deceleration in August was strongest in many of the markets that have had the most growth over the past two years, a sign that affordability is becoming an issue.” The report says that rent growth could continue “decelerating” for the rest of the year.

Among the markets seeing the biggest declines is Orlando, Florida, where rents have skyrocketed. Year-over-year rent growth for apartments was 20.2% in July and dropped to 16.9% in August. Both numbers are well above the national average.

Another example, which is also in Florida, is the rent growth for Tampa. It was 17.5% year-over-year in July, and dropped to 14.0% in August.

Even some of the pricest rental markets are still seeing rent growth, despite the pullback. San Francisco’s year-over-year rent growth was 9.0% in July and dropped to 8.5% in August. In Phoenix, annual rent growth was 13.3% in July, and fell to 9.6% in August.

The report also says that rents declined the most for high-end rental housing. In fact, rent growth was negative for high-end rentals in 21 of Yardi’s top 30 metros.

Apartments.com also reports a slowdown in rent growth for apartments. It says that rents were down .1% across the biggest metros, which is the first time in 20 months that rents have gone down. It says that annual rent growth was 7.1% in August which is down from 8.4% in July. (4)

The report says that rents were down the most in Sunbelt cities because rents haveen soaring in those areas throughout the pandemic. Out of 40 markets tracked by Apartments.com, 13 saw rent growth.

Orange County, California is at the top of the rent growth list for August, with rents up 1%. Saint Louis, San Diego, Columbus, Cleveland, Salt Lake City, Los Angeles, and Portland were also on the positive rent growth side.

You can check for more rent growth data by following links in the show notes at newsforinvestors.com. You will also find tons of information on our website about investing wisely in the real estate market, despite all the challenges we face today. Please hit the join link on our website to become a free member. And please remember to subscribe to our podcast, and leave a review!

Thank you! And thanks for listening. I'm Kathy Fettke.

Links:

1 -https://yieldpro.com/2022/09/annual-rent-growth-rate-falls-as-rents-decline/

2 -https://www.yardi.com/news/press-releases/national-average-asking-rents-stopped-growing-in-august-according-to-yardi-matrix/

3 -https://www.yardi.com/news/press-releases/multifamily-rent-increases-decelerate-according-to-yardi-matrix/

4 -https://www.businessinsider.com/rent-prices-fell-august-first-time-in-20-months-2022-9