Multifamily Starts 2022 Strong

The multifamily market saw solid rent gains in January–normally a tepid month for rent growth, reported Yardi Matrix, Santa Barbara, Calif.

Average U.S. apartment asking rents rose $8 in January to a record $1,604, Yardi reported in its National Multifamily Rent Report. Year-over-year rent growth increased 30 basis points to a new high 13.9 percent, though the report cautioned that number will likely decline as monthly increases decelerate compared to a year ago.

“Single-family rentals also started the year strong,” Yardi said. SFR rents increased 13.5 percent  year-over-year through January and the national occupancy rate increased 0.2 percent year-over-year through January. The report called January’s strong seasonal performance a sign the sector’s fundamental drivers have not been exhausted.

For 2021 as a whole, the year was generally positive as the recovery persisted “despite some bumps along the way,” said Ivan Kaufman, Founder, Chairman and CEO of Arbor Realty Trust, Uniondale, N.Y.

In a report, Multifamily Fundamentals Prepare Industry for Macro Uncertainties Ahead, Kaufman noted several challenges in 2021 ranging from pandemic concerns brought by new variants to the supply chain disruptions and inflation, “but all in all the good news generally outweighed the bad,” he said.

Kaufman said some capital markets participants have begun to reevaluate valuations and forward expectations for the years ahead, but noted multifamily and single-family rental housing ended the year on solid footing. “With sound and still-improving fundamentals, the housing sector as a whole entered the new year with momentum and justifiable optimism,” he said.

Yardi said nearly 460,000 multifamily units were absorbed last year, more than double the previous year and more than 50 percent above the previous annual high. Dallas and Houston led multifamily absorption last year.

The Freddie Mac 2022 Multifamily Outlook report said the strong economic conditions along with unprecedented levels of demand for multifamily housing have combined to create robust apartment market conditions. “While there are still uncertainties, such as increasing inflation or more transmissible variants of the COVID-19 virus…the multifamily market is expected to be on solid ground in the short term.”