Inflation runs extra hot in Sun Belt

And as in 2008, the Sun Belt could serve as a sort of bellwether. Inflation is showing early signs of moderating nationwide, with price increases slowing to 8.5 percent in the year through July, from 9.1 percent the previous month. Still, the same forces that are now causing prices to surge across the South could keep inflation elevated for a longer period.

The impact of inflation has hit many hard, none more so than residents in Florida. The The New York Times interviewed a family from our area, among others, to tell the story.

CPI “FYI”: A Deeper Dive Into The Geographic Variation of Growth Rates - Trepp Key Takeaways: ? San Francisco, New York, and Washington D.C. had rent growth of less than 1.5% on average over the past 18-months. ? The average NOI growth for the top 10 Metros was 5.3% compared to -0.5% for the bottom 9 Metros. ? Average expense growth across the 19 Metros outpaced revenue growth for 15 of the 19 Metros ? Low-rent properties significantly underperformed their high-rent counterparts within each MSA, with 14 Metros seeing a YoY decline in NOI for low-rent properties on average. Nationally, the rental cost for primary residences increased by an average of 5.8% year-over-year (YoY) in June but there is significant variation in rental growth rates across metropolitan areas as one might expect. The Sun Belt Metros of Phoenix, Tampa, Atlanta, and Miami are far and away the best performers across virtually all metrics. All four metros posted double digit YoY revenue growth according to the June CPI release, had strong top and bottom-line YoY growth in the mid- to high-single digits, and have the lowest percentage of financially stressed loans by all three performance measures. On the opposite end, high cost of living Metros and areas with low or negative net migration saw the lowest rent growth. San Francisco, New York, and Washington D.C. had rent growth of less than 1.5% on average over the past 18 months. After accounting for expense inflation, these three Metros all posted YoY declines in NOI. In fact, six of the nine Metros with the lowest YoY revenue growth had negative NOI growth, averaging -0.5%, whereas the average NOI growth for the top 10 Metros was 5.3%. One statistic that caught Trepp’s attention is average expense growth across the 19 Metros outpaced revenue growth for 15 of the 19 Metros, indicating even landlords in high-growth markets are not immune to inflationary pressures. To access the full report https://lnkd.in/euMn2-wx #growth #markets #trepp #cre #crefinance #multifamilyrealestate #multifamilyinvestments #economy #affordablehousing