Current Market Conditions
There are currently more multifamily units under construction than there have been since 1970, representing over five decades of peak building activity.
This surge follows years of substantial rent appreciation driven by nationwide housing shortages. While new construction may ultimately fall short of demand when accounting for population growth, it creates near-term downward pressure on rental rates.
2021-2023 Analysis
2021 was exceptional, with huge rent increases through the summer. Notably, rent growth transitioned to contraction a month earlier in 2023 compared to 2022.
Forward Outlook
Sustained negative rent growth is anticipated due to converging factors: new inventory additions, difficult year-over-year comparisons, tightening credit conditions, and economic uncertainty. While market contraction is unwelcome, it is ultimately beneficial—the market has simply been too hot the last several years.