Pandemic Impact

On multifamily rents

By Leah Etling on Jun 14, 2022 in Matrix

The unprecedented socioeconomic events of the last two years and subsequent impact on multifamily rents is examined by a new bulletin from Yardi® Matrix now available for download.

The publication breaks down the traditional drivers of multifamily rent growth—economic measures such as employment and population growth, and property fundamentals such as supply and changes in occupancy—and details how each impacted the highs and lows rents exhibited from March 2020 to April 2022.

The analysis is broken into two periods: the four quarters following the start of the pandemic (2Q20 to 1Q21) and the four quarters of the recovery and rent surge (2Q21 to 1Q22).

“Drivers of rent growth have changed not only once, but twice, in the two years post-pandemic. Each time was distinctly different,” states report author Paul Fiorilla, director of research for Yardi Matrix. “The period from April 2020 through March 2021 was marked by massive job loss, sheltering from home and migration from gateway markets to the Sun Belt. The April 2021 to March 2022 period was characterized by a booming pent-up demand and massive recovery across the entire country.”

If you’ve been following the apartment industry closely, the general narrative of the pandemic is clear: motivated by remote work options and changes in life circumstances, many renters abandoned high-cost urban gateway markets in favor of more affordable cities with more room to breathe. Major cities like San Francisco, Chicago and New York saw rents drop dramatically and vacancy rates increase.

After vaccine availability brought stabilization of the public health situation and widespread economic recovery ensued in 2021, return to gateway markets began and rents across nearly all markets were driven up by new household formation, low vacancy rates and easily obtainable employment.

“Pent-up demand, strong consumer balance sheets, migration to the Sun Belt and recovery in urban centers lifted rents to uncharted highs in most every metro, regardless of the underlying fundamentals,” Fiorilla writes.

Nationally, rents increased by 15 percent year-over-year through April 2022. With such historic growth unlikely to be able to continue long-term, see what analysts expect will happen next in the latest multifamily bulletin from Yardi Matrix.