Monthly Asking Rents Declined for Fourth Month, Pace Decelerated Slightly
WASHINGTON–(BUSINESS WIRE)–Apartments.com – a CoStar Group company – released an in-depth report of multifamily rent growth trends for November 2022 backed by analyst observations. Monthly asking rents declined for their fourth straight month with the Sunbelt, Las Vegas and Phoenix highlighting the true nature of the deteriorating rent situation.
“While sequential monthly rents have decreased for four straight months, we witnessed a slower decline from October to November, with rents down $6 or 0.4% compared to a decrease of 0.6% just 30 days prior,” said Jay Lybik, National Director of Multifamily Analytics at CoStar Group. “As market conditions slip further out of equilibrium with new deliveries far outpacing demand, we expect monthly rents to continue their downward trend.”
MULTIFAMILY MARKET WEAKENING DESPITE POSITIVE YEAR OVER YEAR RENT GROWTH
National year over year rents continued to remain positive but fell to 4.1% in November compared to 4.8% at the end of October. Miami held the top rent growth spot alongside Midwest and Gateway locations that have gained traction in recent weeks and currently hold positions in the top 10.
None of the top 40 largest markets saw their year over year asking rents expand in the month of November. Historically, the fourth quarter tends to be slower for multifamily, but we’re witnessing a weaker market overall with the downward rent growth and volatile market conditions.
LAS VEGAS, PHOENIX SEE DRAMATIC SLOWING OF GROWTH
The majority of markets with the fastest growing rents throughout 2021 are now seeing the quickest pullback. In particular, Las Vegas and Phoenix have both witnessed a dramatic slowing of growth and sit at the bottom of the annual rent growth ranking for November. Las Vegas’ year over year asking rents decreased from 22.0% in Q4 2021 to 0.4% at the end of November. Phoenix isn’t far behind with year over year rents dropping to 0.4% from 20.8% just eleven months earlier.
SUN BELT, COASTAL CALIFORNIA ROUND OUT WORST PERFORMING RENTAL MARKETS
Sequential rents month over month paint a stark picture of the deteriorating rent landscape. Only nine of the 40 largest markets saw month over month rents holding positive or at zero. In absolute terms, San Jose rents declined the most over the last 30 days, down $28 or 0.9%.
Sunbelt markets constitute five of the 10 worst performing rent growth markets over the past month, with Coastal California markets like the East Bay and San Diego also weakening. However, Raleigh takes the top spot in November with rents retreating by $17 or 1.1%. Seattle wasn’t far behind with a 1.0% rent decrease.
LOOKING AHEAD
For a sign of how fast and deep annual rents have fallen thus far in 2022, Las Vegas and Phoenix are striking examples. Almost a year ago, both of these markets were recording rents up 20% and today, they are just barely positive. With a potential recession looming in the first half of 2023, the current mismatch between supply and demand appears likely to widen even more. Therefore, the downward pressure on rents appears likely to continue across the nation, but especially in over-supplied Sun Belt markets.
About CoStar Group, Inc.
CoStar Group, Inc. (NASDAQ: CSGP) is a leading provider of online real estate marketplaces, information and analytics. Founded in 1987, CoStar conducts expansive, ongoing research to produce and maintain the largest and most comprehensive database of commercial real estate information. Our suite of online services enables clients to analyze, interpret and gain unmatched insight on commercial property values, market conditions and current availabilities. STR provides premium data benchmarking, analytics and marketplace insights for the global hospitality industry. Ten-X provides a leading platform for conducting commercial real estate online auctions and negotiated bids. LoopNet is the most heavily trafficked commercial real estate marketplace online. Apartments.com, ApartmentFinder.com, ForRent.com, ApartmentHomeLiving.com, Westside Rentals, AFTER55.com, CorporateHousing.com, ForRentUniversity.com and Apartamentos.com form the premier online apartment resource for renters seeking great apartment homes and provide property managers and owners a proven platform for marketing their properties. Homesnap is an industry-leading online and mobile software platform that provides user-friendly applications to optimize residential real estate agent workflow and reinforce the agent-client relationship. Homes.com offers real estate professionals advertising and marketing services for residential properties. BureauxLocaux is one of the largest specialized property portals for buying and leasing commercial real estate in France. CoStar Group’s websites attract tens of millions of unique monthly visitors. Headquartered in Washington, DC, CoStar Group maintains offices throughout the U.S., Europe, Canada and Asia. From time to time, we plan to utilize our corporate website, http://www.costargroup.com, as a channel of distribution for material company information. For more information, visit www.costargroup.com.
About Apartments.com
Apartments.com is the leading online apartment listing website, offering renters access to information on more than 1,000,000 available units for rent. Powered by CoStar, the Apartments.com network of sites includes Apartments.com, ApartmentFinder.com, ApartmentHomeLiving.com, Apartamentos.com, WestsideRentals.com, ForRent.com, ForRentUniversity.com, After55.com and CorporateHousing.com.
Apartments.com is supported by the industry’s largest professional research team, which has visited and photographed over 500,000 properties nationwide. The team makes over one million calls each month to apartment owners and property managers, collecting and verifying current availabilities, rental rates, pet policies, fees, leasing incentives, concessions, and more. Apartments.com offers more rental listings than any other apartments website, and innovative features including a drawing tool that allows users to define their own search areas on a map, and a “Travel Time” feature that lets users search for rentals in proximity to a specific address. Apartments.com creates easy access to its listings through a responsive website and iOS and Android apps, and provides unmatched exposure for its advertisers through an intuitive name, strategic search engine placements and innovative emerging media.
The Apartments.com network reaches millions of renters nationwide, driving both qualified traffic and highly engaged renters to leasing offices.
This news release includes “forward-looking statements” including, without limitation, statements regarding CoStar’s expectations or beliefs regarding the future. These statements are based upon current beliefs and are subject to many risks and uncertainties that could cause actual results to differ materially from these statements. The following factors, among others, could cause or contribute to such differences: the risk that rent declines are not as expected, or do not occur at the pace expected, based on trends; and the risk that multifamily deliveries and vacancy rates are not as expected. More information about potential factors that could cause results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, those stated in CoStar’s filings from time to time with the Securities and Exchange Commission, including in CoStar’s Annual Report on Form 10-K for the year ended December 31, 2021, and Quarterly Reports on Form 10-Q for the quarters ending March 31, 2022, June 30, 2022, and September 30, 2022, each of which is filed with the SEC, including in the “Risk Factors” section of that filing, as well as CoStar’s other filings with the SEC available at the SEC’s website (www.sec.gov). All forward-looking statements are based on information available to CoStar on the date hereof, and CoStar assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Contacts
News Media
Matthew Blocher
CoStar Group
(202) 346-6775
mblocher@costargroup.com
