Today, in the Calculated Risk Real Estate Newsletter: Asking Rents Down 1.2% Year-over-year
A brief excerpt: Tracking rents is important for understanding the dynamics of the housing market. For example, the sharp increase in rents helped me deduce that there was a surge in household formation in 2021 (See from September 2021: Household Formation Drives Housing Demand).
The surge in household formation has been confirmed (mostly due to work-from-home), and this led to the supposition that household formation would slow sharply in 2023 (mostly confirmed) and that asking rents might decrease in 2023 on a year-over-year basis (now negative year-over-year).
Recent data suggests household formation has slowed sharply and asking rents are declining year-over-year. With a near record number of multi-family units under construction, slow household formation, rising vacancy rates, and soft rents, most builders expect to start fewer multi-family units in 2024.
25% expect apartment starts to fall by 50%+, and 52% expect a drop of 20%+. Very, very few expect growth ahead….
With slow household formation, more supply coming on the market and a rising rental vacancy rate, rents will be under pressure all year and multi-family starts will decline in 2024. See: Forecast: Multifamily Starts will Decline SharplyThere is much more in the article. You can subscribe at https://calculatedrisk.substack.com/