Full-year rent growth strong, but cooling apartment demand catches up to end 2022

With 2022 now in the books, last year’s apartment rent-growth story is one of strength on a 12-month basis but also of stark deceleration as the year drew to a close.

For full-year 2022, rents increased by 6.2%, ending the year at a national average of $1,715, according to Yardi Matrix. That’s the second-highest year-over-year jump since the turn of the millennium, surpassed only by the astounding leap of nearly 15% in 2021, Yardi reported. The beginning of 2022 was a continuation of 2021’s red-hot rental market, with rents remaining on a steadily upward trajectory through the normally moderate winter months before seeing an even larger bounce in the spring.

But as the year wore on, the strain of inflation, an uncertain economy and weakening demand caught up to the rental housing market, sending rents spiraling in the fourth quarter. Even at 6.2%, December’s annualized rent growth figure was down 80 basis points from November. And while all of the top 30 metro areas tracked by Yardi saw rents increase on a yearly basis in December, only two — Indianapolis (0.4%) and New York City (0.3%) — logged positive rent growth in the fourth quarter. On a national basis, asking rents fell 0.6% (about $10) over the final three months of the year.

On a monthly basis, rents fell 0.2% ($4) in December. While monthly rent changes are sometimes volatile and don’t always signal long-term trends, Yardi views December as illustrative of the marketwide slowdown. Twenty-five of the country’s top 30 metros registered negative rent growth while only three — New York (0.9%), Indianapolis (0.2%) and Houston (0.1%) — saw rents increase.

Boston posted the largest November-to-December rent decline at 1.1%, while Raleigh and California’s Inland Empire (a pair of markets that saw rents vault during the recent upturn) followed with a rent decrease of 0.9% month over month.

Nationally, Yardi expects more of the same in a more modest fashion for the rest of 2023. Asking rents should either stay flat or fall slightly through the spring, the analytics company projected — a departure from historical norms, which typically see the strongest growth as the weather warms up. According to Yardi, rents should then begin to rise moderately again, although the rebound won’t reach the staggering levels seen over the past two years.


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