Paul Fiorilla, Research Director, Yardi Matrix
Multifamily rents came roaring back this spring, and while it’s too soon to say everything is normal again, a strong rebound appears to be on the way.
U.S. multifamily rents increased by $10 to $1,417 in April, the largest one-month increase in six years, according to Yardi Matrix. After falling in the first three quarters after the COVID-19 disruption, rents are now up 1.6% year-over-year.
More notable than the size of the increase, though, is the breadth of the recovery. The pandemic created vast differences in metro performance. Rents plummeted in expensive gateway markets and high-supply metros while continuing to grow in less-expensive and secondary metros that saw a steady influx of population.
In recent months, however, rent growth has been strong across the board. For example, rents jumped in April in New York (up 0.6%) and San Francisco (0.8%), high-cost gateway metros that saw double-digit declines during the pandemic as households left urban cores. Other metros that saw a strong April rebound include Austin and Seattle (both up 0.9%). Unlike the coastal gateway centers, demand remained strong in Austin and Seattle during the pandemic, but rents fell in 2020 due to the influx of new deliveries.
Meanwhile, metros that performed well throughout the pandemic maintained their momentum this spring. Examples include Inland Empire (up 9.4% year-over-year through April), Sacramento (up 8.4% year-over-year) and Orange County (up 2.5% year-over-year).
Economists are projecting a strong recovery in GDP and employment over the next 18 months as the country makes progress on vaccinating the public and consumers use the extra $4 trillion they saved over the past year to take advantage of pent-up demand for goods and services.
To be sure, events around the world demonstrate that progress in fighting COVID-19 is not linear, so caution is warranted, but all signs point to a robust recovery in multifamily in coming quarters.