Even after the incredible growth seen last year, multifamily apartment rents don’t seem to be slowing down.
Just how fast are apartment rents growing now? What’s the forecast for the rest of the year? How might this impact both renters and investor landlords?
Multifamily Rents Are Growing
According to Zumper and the National Rent Report, apartment rental rate increases were already outpacing the growth seen in 2021.
Last year we saw rents jump by 70% or more in some areas. With 50% increases not uncommon.
The median rent for a one bedroom apartment has hit a new national high of $1,400 per month.
The 2022 Outlook
There doesn’t seem to be any slowing in inflation. In fact, many factors may only accelerate general inflation this year.
If multifamily apartment rents continue on this pace, they could easily be on target for another 30% increase by the end of this year.
What It Means For Renters & Investors
Many landlords aren’t going to renew leases to the same tenants, as in order to take advantage of new market rent rates, they would have to blow through limitations on rent increases. So, many renters will be looking for new places to live.
Many tenants will have to move outwards to find something affordable and attractive. Some may downsize in cities, and then choose to buy their second homes first, outside of the city. As they just can’t save enough to buy their first home in expensive urban areas.
All of this demand for rentals means that landlords can better cherry pick the best tenants. They can be more selective in picking the strongest, and best performers. Which in turn should bolster investment performance for the next couple of years.
This trend is also great for investors locking into multifamily deals now, and seeing rents rise. They can currently benefit from both asset appreciation (wealth building) and rising revenues (passive income yields).
Whether investing alongside other equity partners, through private funds and syndications, or using low interest rate debt financing, it seems the ideal time to lock in a low basis, and enjoy widening margins.
Rental rates on multifamily apartments seem to be building on last year’s momentum to grow even faster in 2022.
Looking forward, rental rates could easily set new records, and be up a further 30% by December.
This can be a challenging time for many tenants, who may have to be more flexible in where they live, and ultimately buy homes of their own.
However, this all seems to be upside potential for multifamily property investors who can lock in now, and see more profits ahead.