A look at YTD rent growth and its implications for apartment demand
Annual rent changes are a lagging indicator of current market conditions, but year-to-date (YTD) rent growth is better at understanding what’s happening at a year’s midway point. As of June 2023, YTD rents have grown 1.9% across the country, indicating strong demand. The market is stabilizing, with occupancy only fluctuating 10 basis points since January to hit 94.7% in June. The YTD figures are the second weakest since 2010 and post the Great Recession of 2007 to 2009, and the lowest stemming from the pandemic period. The sluggish start in 2023 should not be overly alarming, especially considering the recent surge in new apartment deliveries and 1.038 million new units under construction.
Regional variations show that the South and West have the greatest supply, resulting in less YTD rent growth momentum compared to the Midwest and Northeast. The South has a stronger market due to its new construction, while the West has the weakest YTD rent growth, particularly in Phoenix, Las Vegas, and Salt Lake City. The report is optimistic, stating that demand appears to have turned a corner from the bearish 2022 figures and that “renter demand remains robust.”