When it comes to apartment rent growth in 2022, throw the traditional seasonal patterns out the window.
Average monthly asking rents in the U.S increased by $10 in February, reaching a record high of $1,628, according to Yardi Matrix. Last month’s year-over-year jump of 15.4% also is a new high, up a full percentage point from the annualized gain in January. Of the top 30 metros tracked by Yardi, 90% saw double-digit year-over-year rent growth.
The sustained increase in rents is indicative of the enduring shortage in the nation’s housing supply, both for renters and buyers. This scarcity has intersected with the ongoing surge in demand, pricing potential homebuyers out of the market and consequently driving up absorption in multifamily units. Consider that, in January 2021, occupancy rates were at 95% or higher in 13 of Yardi’s top 30 markets. This year, 28 of the top 30 were at or above the same level.
Occupancy growth is most notable in some gateway cities that saw renters flee in the early stages of the COVID-19 pandemic. New York City, for example, saw a 2.9% increase in its occupancy rate during the year ending in January, topping Yardi’s 30 major metros. Likewise, San Jose and Chicago posted healthy gains of 2.8% and 2.6%, respectively. Eighteen-hour cities with high population growth and high supply, such as Nashville (2.3%) and Austin (2.1%), also have seen occupancy rates surge thanks to stout demand.
In fact, only a few major metros have seen their occupancy growth rates lag. Las Vegas, for example, saw occupancy creep up by 0.1% annually while Phoenix, Sacramento and California’s Inland Empire each registered a decline of 0.2%. But as tech hubs or less expensive alternatives to nearby gateways, occupancy rates in each of these metros were already high. Combined with still-strong demand, landlords in these cities aren’t any worse for wear.
