Thanks to seasonal factors, January is typically slow when it comes to apartment rent growth, but this past month opened the year with healthy gains, according to Yardi Matrix.
After decelerating in December, multifamily asking rents rose by $8 month over month in January and climbed to an all-time high of $1,604. This is a departure from normal historical trends as rents grew by a combined total of $9 in the six Januaries from 2015 through 2020. It’s still a far cry from the $22 average monthly rent gains recorded from March through October of last year, but this strong winter showing indicates that conditions fueling the strong demand of 2021 remain in play.
Year-over-year rent growth also was notable, rising by 30 basis points from December to reach a record-high 13.9% in January. Annualized growth rates reached 20% or more in six of the top 31 metros tracked by Yardi, and they hit 10% or more in 28 of 31 metros.
Yardi also reported absorption numbers for full-year 2021, which offered more evidence of the blazing demand for U.S. apartments. Roughly 460,000 apartment units were absorbed in 2021 — another record high that was more than twice the 2020 number and more than 50% above the previous record.
Dallas and Houston led the country in absorption, but five of the next six cities on Yardi’s list — Miami, New York, Chicago, Washington, D.C., and Los Angeles — were gateway hubs, illustrating the continued recovery of the largest U.S. rental markets from pandemic-induced doldrums. Each of the five aforementioned gateways posted positive absorption of at least 20,000 units last year.
With strong rent gains reflecting the sturdiness of the multifamily market’s fundamentals, Yardi also anticipates last year’s transaction volumes to continue into this year. Apartment sales reached a new record of $198 billion last year, which was 55% above the previous high of $129 billion set in 2019. At $191,000, the price per unit also hit a new peak last year, eclipsing the prior mark by more than 20%.