For the first quarter of 2022, the multifamily industry moderated from the historic highs of 2021. Our multifamily data indicates absorption, rent growth and construction remain high and we expect growth to continue above long-term averages. The jury is still out on absorption matching or exceeding its long-term average.
2022 1Q Report: High Absorption/Demand Leveling After Historic Highs in 2021
Absorption/Demand for apartments in 2021, as the economy reopened, reached historic highs as represented by the Blue Bar.
The Orange Bar represents the long-term average absorption for each metro area and contrasts the unusual strength of demand for 2021 when compared to the long-term average. The long-term average was calculated by using the absorption performance between 2009 and 2019.
The Green Bar represents the first quarter’s absorption performance for 2022. These numbers provide a glimpse of how absorption is tracking to match long term absorption and more importantly measure up to the level of new supply/construction for 2022 represented by the Gold Bar.
The first quarter absorption performances for DFW and Austin are off to a great start blessed with better than average job growth fueled by a steady stream of corporate relocations.
Houston’s first quarter absorption is decent but will need stronger performances from the 2nd and 3rd quarters to match the long term and construction targets. San Antonio’s absorption of 400 units looks weak and presents a scenario where a lot of ground must be made-up to get back to long-term absorption.
2021 Saw Unprecedented Rent Growth
2021 brought unprecedented rent growth driven by the reopening economy. 2021 rent growth is represented by the Blue Bar.
The Green Bar represents long term rent growth. The long-term average was calculated by using the annual rent growth performance between 2009 and 2019.
Rent growth for 2022 is forecast to ease significantly from 2021 levels but run stronger than the long-term average. The Orange Bar represents the six-month annualized rent trend as of 03-31-2022 and is presented as a proxy for rent growth for 2022. All the same dynamics that sparked the incredible rent growth of 2021 have moderated but are still statistically significant. Job growth remains strong, in migration continues, single family’s limited supply and high prices coupled with escalating mortgage rates favor a stronger rental market.
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