Today, Apartments.com – a CoStar Group online marketplace –
released an in-depth report of multifamily rent trends for the
fourth quarter of 2023. Throughout the year, a record number of
units were delivered, presenting varying supply and demand
challenges across the country.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20240108656944/en/
Annual and Monthly Apartment Rent Growth
by Region (Graphic: Business Wire)
“The U.S. multifamily market staged a strong rebound in 2023 as
the number of units absorbed rose by 122% year-over-year to 332,000
units,” said Jay Lybik, National Director of Multifamily
Analytics at CoStar Group. “While the increase in demand was
impressive, it was overshadowed by the influx of new units, causing
imbalances in supply and demand and pushing vacancy rates higher.
With fewer unit completions slated for this year, 2024 may offer
some reprieve for the multifamily market.”
RECORD UNIT COMPLETIONS CAUSE SUPPLY-DEMAND IMBALANCE, HIGHER
VACANCY
In 2023, 565,000 new units were delivered, the highest number of
units completed since the mid-1980s. The record number of
deliveries caused an imbalance between supply and demand, pushing
the vacancy rate higher from 7.3% at the end of September to 7.5%
in December, marking the ninth-consecutive quarter in which supply
outpaced demand. As a result, vacancy was over 100 basis points
higher at the end of 2023 than it was at the end of 2022.
REGIONAL ANNUAL RENT GROWTH DIFFERENCES
With vacancy rising throughout 2023, average annual asking rent
growth decelerated from 3.9% at the start of the year to 0.9% by
the third quarter, remaining there until year-end. Midwest and
Northeast markets avoided oversupply conditions and maintained
strong rent growth throughout the year. In the South, oversupply
pushed rent growth into negative territory while markets in the
West experienced a mix of weak demand and limited completions over
the past 12 months, keeping rent growth restrained but
positive.
ORANGE COUNTY, CALIFORNIA, ENDS 2023 WITH STRONGEST ANNUAL
RENT GROWTH, SUN BELT CITIES FALTER
Of the top 50 markets across the country, Orange County held the
strongest annual asking rent growth for the year at 3.9%.
Louisville and Northern New Jersey were close behind, both at 3.7%.
The majority of the 10 best performing markets for annual rent
growth are in the Midwest or Northeast.
On the other hand, rents fell by 5.1% over the year in Austin,
followed closely by Jacksonville, Charlotte and Atlanta with annual
rent losses ranging from 4.8% to 2.6%. Eight of the 10
worst-performing markets in 2023 were in the South, due to
supply-demand imbalances.
DEMAND FOR 3-STAR PROPERTIES RISES, 1- AND 2-STAR REMAIN THE
WEAKEST
Over 300,000 units across 4- and 5-star properties were absorbed
in 2023. However, with the majority of new supply coming into the
luxury market, annual asking rent growth decreased in this segment,
finishing the year at negative 0.4%.
In contrast, demand for 3-star properties rose, with net
absorption rebounding from negative 18,000 units in 2022 to a
positive 64,000 units in 2023, helping to keep rent growth positive
for this sector at 1.4%. The demand for 3-star properties was due
in large part to improved consumer confidence, lower inflation and
lack of a recession.
Demand for 1- and 2-star properties remained the weakest, with
2023 marking the second consecutive year of negative absorption.
Households at this price point continued to struggle with higher
costs for housing and everyday items, pushing some to seek
alternative housing solutions, such as moving in with roommates or
returning to family homes.
LOOKING AHEAD
After reaching a 40-year record high for unit completions in
2023, the multifamily market may be able to recover some in 2024.
Only 444,000 units are projected to be delivered in 2024, a 25%
pullback from the previous year. However, property operations going
into the year vary widely depending on the market and price point.
Markets in the South and luxury properties remain most at risk for
further weakness due to oversupply, while Midwest and Northeast
locations and mid-priced 3-star properties could outperform.
ABOUT COSTAR GROUP CoStar Group (NASDAQ: CSGP) is a
leading provider of online real estate marketplaces, information,
and analytics in the property markets. Founded in 1987, CoStar
Group conducts expansive, ongoing research to produce and maintain
the largest and most comprehensive database of real estate
information. CoStar is the global leader in commercial real estate
information, analytics, and news, enabling clients to analyze,
interpret and gain unmatched insight on property values, market
conditions and availabilities. Apartments.com is the leading online
marketplace for renters seeking great apartment homes, providing
property managers and owners a proven platform for marketing their
properties. LoopNet is the most heavily trafficked online
commercial real estate marketplace with over twelve million monthly
global unique visitors. STR provides premium data benchmarking,
analytics, and marketplace insights for the global hospitality
industry. Ten-X offers a leading platform for conducting commercial
real estate online auctions and negotiated bids. Homes.com is the
fastest growing online residential marketplace that connects
agents, buyers, and sellers. OnTheMarket is a leading residential
property portal in the United Kingdom. BureauxLocaux is one of the
largest specialized property portals for buying and leasing
commercial real estate in France. Business Immo is France’s leading
commercial real estate news service. Thomas Daily is Germany’s
largest online data pool in the real estate industry. Belbex is the
premier source of commercial space available to let and for sale in
Spain. CoStar Group’s websites attract nearly 160 million unique
monthly visitors. Headquartered in Washington, DC, CoStar Group
maintains offices throughout the U.S., Europe, Canada, and Asia.
From time to time, we plan to utilize our corporate website,
CoStarGroup.com, as a channel of distribution for material company
information. For more information, visit CoStarGroup.com.
ABOUT APARTMENTS.COM Apartments.com is the leading
online apartment listing website, offering renters access to
information on more than 1,000,000 available units for rent.
Powered by CoStar, the Apartments.com Network of sites includes
Apartments.com, ApartmentFinder.com, ApartmentHomeLiving.com,
Apartamentos.com, WestsideRentals.com, ForRent.com,
ForRentUniversity.com, After55.com and CorporateHousing.com.
Apartments.com is supported by the industry's largest
professional research team, which has visited and photographed over
500,000 properties nationwide. The team makes over one million
calls each month to apartment owners and property managers,
collecting and verifying current availabilities, rental rates, pet
policies, fees, leasing incentives, concessions, and more.
Apartments.com offers more rental listings than any other
apartments website, and innovative features including a drawing
tool that allows users to define their own search areas on a map,
and a "Travel Time" feature that lets users search for rentals in
proximity to a specific address. Apartments.com creates easy access
to its listings through a responsive website and iOS and Android
apps and provides unmatched exposure for its advertisers through an
intuitive name, strategic search engine placements and innovative
emerging media.
The Apartments.com Network reaches millions of renters
nationwide, driving both qualified traffic and highly engaged
renters to leasing offices.
This news release includes "forward-looking statements"
including, without limitation, statements regarding CoStar's
expectations or beliefs regarding the future. These statements are
based upon current beliefs and are subject to many risks and
uncertainties that could cause actual results to differ materially
from these statements. The following factors, among others, could
cause or contribute to such differences: the risk that new unit
deliveries do not occur when expected, or at all; and the risk that
multifamily vacancy rates are not as expected. More information
about potential factors that could cause results to differ
materially from those anticipated in the forward-looking statements
include, but are not limited to, those stated in CoStar’s filings
from time to time with the Securities and Exchange Commission,
including in CoStar’s Annual Report on Form 10-K for the year ended
December 31, 2022 and Forms 10-Q for the quarterly periods ended
March 31, 2023, June 30, 2023, and September 30, 2023, each of
which is filed with the SEC, including in the “Risk Factors”
section of those filings, as well as CoStar’s other filings with
the SEC available at the SEC’s website (www.sec.gov). All
forward-looking statements are based on information available to
CoStar on the date hereof, and CoStar assumes no obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240108656944/en/
NEWS MEDIA: Matthew Blocher CoStar Group (202) 346-6775
mblocher@costargroup.com
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