Positive Outlook for Investors Amid Decreasing Rents: Reasons for opti

Apartment rents in the US recorded a fourth consecutive monthly decline in December, signaling a further cooling in the US housing market brought on, in part, by the Federal Reserve's tightening monetary policy. According to RealPage Market Analytics, effective asking rents for new leases nationally fell 0.44% in December, following an average erosion of 0.28% from September through November 2022. Rents fell 0.59% in November, the largest monthly decline since 2010, outside of the pandemic-distorted months of April and May 2020. On a year-over-year basis,

Change in Effective New Lease Asking Rents, U.S. Market Rate Apartments

Source: RealPage Market Analytics

RealPage data shows that national effective rent growth for new leases was 5.68%, the smallest increase since May 2021 and well below the peak of 15.7% in March 2022. Occupancy in December remained relatively high at 94.95%. That's consistent with long-term averages, and slightly below the same month in both 2018 and 2019, but 2.53% below December 2021. Leasing traffic among prospective renters declined throughout 2022, and Q4 2022 activity was the weakest for any fourth quarter since 2014, which itself was about 14% below the 10-year historical average. The silver lining here for multifamily investors and operators is that resident turnover remains historically low: Average turnover in Q4 2022 was the second-lowest recorded by RealPage for any fourth quarter over the past 10 years, bested only by Q4 2021. Many economic observers are predicting a recession this year, with consumer confidence weakening and lagging demand for apartments. However, inflation appears to be losing momentum and there may be reasons for optimism in the long term, even if 2023 is shaping up to be a bumpy ride.