Hopeful Signs for Multifamily

Welcome to our monthly newsletter on the national multifamily real estate market. As we navigate through 2024, we're seeing some encouraging signs in the multifamily sector, despite challenges in certain markets. Here are the key takeaways from recent brief data derived from the Yardi matrix monthly report: I have used AI to simplify it so you can read it in a few minutes but feel free to download a full report too.

1. Steady Rent Growth

National average advertised rents increased by $4 to $1,743 in July, with year-over-year growth rising to 0.8%. While this growth is modest compared to historical standards, it marks the sixth consecutive month of increases, indicating resilience in the market.

2. Regional Variations

We're observing significant regional differences in performance: - Strongest performers: New York City (5.2% YoY), Washington D.C. (4.0%), and Kansas City (3.4%) - Challenging markets: Austin (-5.7%), Atlanta (-3.3%), and Raleigh (-2.8%)

3. Occupancy Rates

The national occupancy rate has held steady at 94.6% for seven straight months. This stability suggests a balanced market overall, though individual metros show variations.

4. Economic Factors

The U.S. economy added 1.3 million jobs in the first half of 2024, with GDP growing by 2.8% in Q2. This economic strength is supporting multifamily demand.

5. Supply Pipeline

High levels of new deliveries are expected to continue for the next 15-18 months. This increased supply is creating temporary challenges in some markets but also addresses long-term housing needs.

6. Policy Considerations

Housing affordability remains a key topic in policy discussions. While some proposed measures like rent control may pose challenges, others aimed at increasing housing supply could benefit the sector long-term.

7. Single-Family Rental (SFR) Market?

The SFR segment continues to show strength, with national average rents reaching a record high of $2,171. This trend underscores the ongoing demand for rental housing across various property types.

Looking Ahead, despite short-term fluctuations in some markets, the multifamily sector's fundamentals remain strong. Demographic trends and economic growth continue to drive demand, while supply increases address housing needs in many areas.

The multifamily market offers solid long-term investment potential, particularly in markets with strong job growth and controlled supply pipelines. As always, we recommend a careful, data-driven approach to investment decisions.