Recession Fears Drive Multifamily Rent Reductions: Is It A Silver Lining For Tenants?

Fears that a recession is looming are causing rents for multifamily properties in some markets to slow.

Nationally, average asking rents in August increased 12 basis points month over month, but 51 of the 136 markets surveyed saw declines, compared with 41 in July and 14 in June. The majority of markets are still seeing monthly increases.

"Our national forecasts for 2023-2024 have been revised downward with the increased likelihood of a minor recession, though we maintain a generally optimistic outlook since markets experiencing negative rent growth are tied to local supply-demand dynamics rather than economic conditions," Yardi Matrix Vice President and General Manager Jeff Adler wrote in a recent newsletter.

Even so, Yardi Matrix's view of the multifamily market hasn't changed. The company expects a minor recession early next year as the Federal Reserve rate increases are felt more acutely by the average consumer.

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Restarting student loan payments will put financial strain on some consumers and have an adverse impact on overall consumer spending, despite its resilience in the face of interest rate hikes, the report states.

Meanwhile, solo renting is on the rise, with 16.7 million renters in America living alone, according to a recent report from RentCafe. The biggest fans of living alone are Baby Boomers at 32.4% and Millennials at 29.5%.  Few Gen Zers live by themselves — likely because of the additional cost. It costs an extra $8,600 per year to live by yourself, according to RentCafe.

Top 10 Metros With Highest Rise In Renters Living Alone

Salt Lake City, which has a cost of living that's slightly higher than the national average, saw an increase of 24.9% in solo renters between 2016 and 2021 — the biggest jump across the country. Coming in second is McAllen, Texas, which has an extremely reasonable cost of living. Renting alone is most affordable in Akron and other Ohio towns. 

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