Rental Rates Cool Off for 2023

AS THE REAL ESTATE MARKET IS NORMALIZING AFTER THE PAST TWO YEARS, IT’S NOT JUST HOME SALES THAT ARE SLOWING:

“Virtually all aspects of the housing market — both forsale and rental — have been decelerating. … apartment rents have continued to push ever higher, but the pace has been moderating in recent months. … And while multifamily vacancies are at their lowest level in four decades and rents continue to log new records every month, the rates of increase have been slowing and are expected to decelerate further, according to many experts interviewed. ‘Maybe you don’t see the 10 percent–plus rent growth in multifamily markets,’ says the head of one institutional investment advisory firm. ‘They should come back to more of a long-term historical average of 3 percent to 4 percent, and maybe offset some of the unaffordability in the country.’”

2023 Emerging Trends in Real Estate® Report — PWC and Urban Land Institute, page 6

A big factor that will determine where rents go in each market is inventory levels versus demand. Nationwide, multifamily construction is at a 50-year high, according to Redfin’s forecast, “which means hundreds of thousands of new rental units will be available next year.”

Housing Market Predictions 2023: A Post-Pandemic Sales Slump Will Push Prices Down For The First Time In A Decade — Redfin