Rent Growth: Winners and Losers

Rent Growth Rollercoaster: A Snapshot of the Regional and Market-Level Trends

Which multifamily markets have seen the greatest levels of rent growth, and where has rent growth fallen short? In a recent presentation at the Apartmentalize 2024 conference, CoStar’s Jay Lybik shared the latest rent growth highlights. The national director of multifamily analytics also shared his outlook through the end of the year.

Dramatic ups and downs in the multifamily market

The last few years have witnessed major shifts in rent growth. During the pandemic, rent growth saw a massive spike, rising in 2021 to a national average of 10.2 percent— “just a phenomenal number,” Lybik said.

Following this high, rent growth quickly retreated and has remained modest for the last three quarters, hovering around 1 percent, Lybik said, but is on track to begin to rebound.

At the same time as the swings in rent growth, the supply pipeline was flooded with the delivery of new units. 2023 marked the highest delivery total since the 1980s, and 2024 is only slightly down from that historic level.

Regions swap places in rent growth charts

After driving record rent growth only a few years ago, the Sun Belt has now fallen to last place, thanks to a mismatch between supply and demand. Maintaining slow and steady growth, the Midwest has come out ahead, with the Northeast close on its heels.

“It’s a great example of the tortoise beating the hare,” Lybik said.

Unlike the Sun Belt, where the pandemic kicked off a flood of new supply, the Northeast did not see a supply explosion during the pandemic, and the Midwest reached supply-demand equilibrium this year.

But it isn’t just the supply pipeline. The Midwest and Northeast have maintained solid demand, whereas the Sun Belt saw a “huge falloff” in demand.

“There’s this myth in the multifamily space that Sun Belt markets are seeing outsized demand, especially relative to their pre-pandemic levels,” Lybik said, “and that’s not true.”

As for the West, this region was a distant second to the Sun Belt at its height, and now average rent growth for the region is lackluster but in the black.

The top- and bottom-performing markets

True to the region-wide trends, the top 10 markets for rent growth are in the Midwest and Northeast, while the 10 hardest hit are all in the Sun Belt.

Leading the pack for rent growth are five markets not typically considered highflyers: Louisville, Kentucky; Cleveland, Ohio; Kansas City, Missouri; Washington, D.C.; and Columbus, Ohio.

“I never thought I would stand in a crowd like this and say that Louisville is the rent growth leader in the United States,” Lybik said. “That’s just shocking.”

Multifamily markets historically known for their success are currently rounding out the bottom of the chart: Austin, Texas; Raleigh, North Carolina; Jacksonville, Florida; Atlanta, Georgia; and Charlotte, North Carolina.

These trends are expected to continue. The markets on track to outperform their pre-pandemic five-year average rent growth are mostly found in the Midwest and Northeast, while those forecast to fall short of their averages are primarily in the Sun Belt and West.

Looking for more multifamily insights?

Join Jay Lybik for more analysis of the multifamily market. Watch the latest webinar for a look at the mid-year state of the market (click CC for closed captioning):

And check out these recent reads:

• Multifamily Vacancy Stabilizes in Q2, As Demand Rises
• Top 12 Multifamily Markets for Rent Growth in Q2 2024
• Top 10 Multifamily Markets Facing Largest Rent Declines

CoStar is the industry-leading source for information, analytics, and news about all areas of commercial real estate. Whether you’re an owner, investor, or apartment operator, you’ll find in-depth analysis from Jay Lybik and other experts to help you stay on top of the latest trends in the market. Learn more about CoStar.

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