February marked a return to positive rent growth – albeit by just 0.3 percent nationally – after five straight month-over-month declines, according to the March 2023 Rent Report from Apartment List.
Despite that minor milestone, for the near term, fundamentals are looking less-than-rosy for landlords.
This year could be the first time since the early stages of the pandemic that property owners are competing for renters, rather than the other way around, according to the report.
“There are currently more multifamily units under construction than at any point since 1970,” according to the report.
“As this new inventory hits the market over the course of the year, property owners could be competing for renters to fill their units, a marked change from the prevailing conditions of the past two years, in which renters have been competing for a limited supply of available inventory.”
The rent growth shown is like that of Februarys pre-pandemic. Year-over-year, rent growth is continuing to decelerate, and at 3 percent, is at its lowest level since April 2021. Apartment List said it is likely to “decline further” in the months ahead.
Vacancy sits at 6.4 percent and supply is easing. Rents increased in February in 62 of the nation’s 100 largest cities.
“With a record number of multi-family apartment units currently under construction, we expect that supply constraints will continue to soften,” according to the report.
Over the past six months, no large metro area in the country has experienced positive rent growth.
Boston saw the nation’s fastest rent growth at a 1.5 percent increase.
“The Boston metro now also ranks among the top 10 for fastest year-over-year rent growth, even as it continues to be among the nation’s most sluggish rental markets when measured over the course of the pandemic as a whole,” according to the report.
As for the remainder of 2023, it’s possible that the vacancy rate could even surpass that pre-pandemic threshold, Apartment List said.
“New apartment construction has picked up steam again after facing pandemic-related delays in recent years,” the report said.