While it may be challenging for the apartment market to repeat astronomical rent growth from 2021, the outlook remains strong for the next 15 months and beyond.
Rent growth above 10% is an anomaly. But RealPage says that 15 markets should post rent growth above that marl in 2022 and 2023. Many of these hot markets are in the Western region and California, which is plagued by an undersupply of housing. Just below that group of markets sits Atlanta, where rent growth should approach 10% in the next couple of years.
Many of these hot markets will see pandemic-influenced migrations continue to drive rent growth and occupancy over the next couple of years. But that’s not the only thing propelling strong fundamentals. Many major markets are nearing a full recovery from the job losses suffered during the pandemic.
Still, there is room for more growth to propel employment and, ultimately, rents. Recently, Apartment List outlined five factors that were driving growth. Those included more households competing for homes than ever, homeownership becoming prohibitively expensive, renters actively looking for homes right now, apartment hunters searching with increased urgency and apartment vacancy rates at historically low levels.
The current rental growth has taken place without full employment. If that takes off, things could get even tighter, even if there is a seasonal slowdown this winter. As the 25-to-54 age cohort enter or reenter the workforce, the nation as a whole will march even further toward full employment. If that happens, an already hot apartment market could grow torrid in the next couple of years.