In its special multifamily rent forecast for 2023, Yardi Matrix predicts non-seasonal declines in average asking rents.
Yardi Matrix says interest rates that continue to rise, “will, eventually, take their toll on the job market, and rather than adding more jobs than economists expected every month, there will almost certainly be job destruction and the requisite pothole in household formation, leading to a non-seasonal decrease in average asking rents.”
Highlights of the report
“We now find ourselves at a juncture where more companies are pushing for at least a partial return to office,
The tech industry is experiencing widespread layoffs
There has been a dramatic increase in interest rates
There is a paralysis in the single-family housing market
Despite this, the job market continues to exceed consensus expectations almost every month.
“Household formation is intrinsically tied to job creation, so a robust job market fuels demand for housing, and conversely, a weaker job market depresses housing demand,” Andrew Semmes, Senior Research Analyst, writes in the report.
“Our view is that we are likely to start seeing job destruction and experience a recession beginning in the third or fourth quarter of next year, but that it will not be particularly deep or lengthy. At that point we will likely start to see broad declines or stagnation in average asking rents, but not enough to offset the gains that we expect in the first half of 2023,” Semmes writes in the report.
Revised rent decreases forecast for 2023
The Yardi Matrix has revised its 2023 forecast downward to 3.1 percent from 3.5 percent.
“We expect to see all of that growth in the first two to three quarters” of 2023, the report says.
“We have revised 2024 upward to 4.1 percent from 3.3 percent, as we expect economic growth to pick back up in the beginning to middle of the year.”
Read the full report from Yardi Matrix here.