The multifamily rental market has rebounded to its pre-pandemic performance, according to Yardi’s national multifamily report released on Tuesday. The median multifamily rent increased 2.5 percent year over year in May — the same rate of growth in March 2020 before the first set of lockdowns.
The median rent for all rental types experienced its largest monthly increase in Yardi’s history, with rents rising 0.8 percent to $1,428. For the second consecutive month, all top 30 metros had positive monthly rent growth and 27 markets experienced monthly rent growth of 0.5 percent or more.
“Nationally, there is little weakness left in the multifamily sector,” the report read. “[Annual] rent growth is back to pre-pandemic levels, and rents on a dollar amount basis increased the most in a single month in the history of our data set.”
The Inland Empire (10.2 percent), Phoenix (9.6 percent) and Sacramento (8.3 percent) experienced the greatest annual increase in multifamily rents, with Kansas City, Raleigh and Dallas reporting annual growth barely above the national average (2.5 percent). Only eight markets experienced a decline, with San Jose, New York City and San Francisco reporting rent decreases reaching 10 percent.
“San Jose (-9.0 percent), New York (-8.8 percent) and San Francisco (-6.7 percent) still have a lot of ground to make up,” the report explained. “But the recovery is in full swing.”
The Inland Empire (18.3 percent) led the pack once again in single-family rent growth. Phoenix (15.3 percent) and Denver (13.5 percent) rounded out the top three, which Yardi said is a result of “migration and competitive housing markets pushing more people to rent.”
The national median single-family rent increased 7.3 percent year over year to $1,761. Despite the boom in median rent, single-family occupancy levels increased 1.5 percent annually to 96.6 percent.
“The pandemic has fueled even more demand, and new institutional investors are pursuing the sector every day,” the report read. “The current constraints to purchase a home coupled with demand for more space is fueling strong rent and occupancy growth across metros.”
Lastly, New York City (3.4 percent), Chicago, Las Vegas and Portland (all 1.1 percent) led the way for monthly short-term rent gains. Meanwhile, Seattle experienced the weakest monthly increase at 0.2 percent, which Yardi attributes to the swath of tech workers utilizing remote work to relocate to more affordable markets.
“The largest drivers of the tech listings in Seattle are Amazon, Salesforce and Facebook,” the report explained. “Depending on how each company’s stance on remote work evolves, the strong tech hiring may not translate to a strong multifamily market as it has in the past.”
An improving employment market will lead to increased multifamily rental demand, Yardi explained, with markets across the South, Midwest and West standing the most to gain.
“Tenant demand for multifamily has been extremely strong this year, especially in gateway markets that struggled with an exodus of renters in 2020,” the report said. “Demand year-to-date is led by fast-growing metros including Dallas (8,200 units absorbed), Miami (5,700), Atlanta (5,400) and Phoenix (4,600).”
“As a percentage of stock, leading markets include Nashville (2.1 percent of stock), Miami, Charlotte and Chicago (all 1.9 percent),” it concluded.