By Roland Murphy for AZBEX
Two recent articles on GlobeSt.com, written by the same reporter and published one day apart, show the U.S. multifamily market may be stabilizing, but plenty of uncertainty remains.
Barbara Ballinger, an industry reporter with a solid reputation, wrote in a May 1 article entitled, “April’s Apartment Rent Growth Hits Several Grim Milestones,” that apartment rents increased 1.7% in April. Using data from Apartment List, the article noted the April increase was the lowest since March 2021 and fell below the pre-pandemic average of 2.8%.
Ballinger said the month-over-month increase of 0.5% indicated continued deceleration in multifamily and pointed out that spring is typically a time of year when growth speeds up. This April was the second slowest for rent growth of any year since Apartment List began tracking the market in 2017.
She also quoted Apartment List as saying the new supply of units coming onto the market will keep prices constrained even if demand increases in the summer.
The first article noted different regions in the country are being impacted differently. The East Coast and Midwest are seeing a rebound, while the West, including Phoenix, which had been one of the leaders in the recent price increase surges, was continuing to see the biggest declines.
Ballinger’s May 2 article, “Multifamily Fundamentals Are Beginning to Stabilize,” showcased other market indicators and showed much more optimism. She reported the overall vacancy rate in multifamily increased quarter-over-quarter by 0.3%, according to CBRE, hitting 4.9% in Q1. That increase was less than the 0.7% Q4 2022 increase or the 0.9% Q2 2022 rate.
CBRE forecasted positive absorption in Q2, after this quarter sees negative net absorption of 1,900 units. Last quarter’s negative absorption was 14,000 units.
This quarter’s net absorption is already in positive territory in 35 of the 69 markets CBRE tracks.
Ballinger then reported new construction deliveries for the past four quarters total of 332,200, which is lower than the 343,300 total for 2022. She quoted the CBRE report as saying the currently elevated construction timelines should help even out the delivery of units in the pipeline.
She noted CBRE analysts as saying that while vacancy is still climbing, its slower rate indicates demand is solidifying.
“In short,” Ballinger said, “the multifamily sector appears to be stabilizing.”
We’ve often said that one period’s data sets do not make for a trend, but, assuming the source data in both Ballinger’s articles are correct, hope may be justified that the recently roiling seas of the national multifamily market could be starting to calm.