There likely won’t be another spike in rents, but rent growth is likely to persist for the long-term.
Last year, apartment rent growth was a tale of two cities, or at least two types of cities. Rents plummeted in major metros-in some cases by double digits-and jumped in small cities and suburbs-in some cases by double digits. This year, rents rebounded back in the big cities and continued to grow in emerging markets. This new period of rent growth is likely to be the new normal over the next 12 months.
Prior to the pandemic, there was a national supply-demand imbalance that had driven a near decade of multifamily rent growth. That dynamic didn’t change during the pandemic. Now, it is creating a foundation for a new cycle of rent growth, at least for the next 12 months.
While rent appreciation is going to continue, it won’t be the dramatic double-digit growth numbers from the last year. That growth was the result of rapid and sweeping changes in migration patterns. The rapid rent growth this year was due to limited leasing activity in 2020. Still, the strong demand for multifamily assets and the shortage across the country support continued rent growth.
Provided by Kelsi Maree Borland with GlobeSt.com.