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5 Speed Bumps Ahead that Could Slow the Booming Apartment Market

The multifamily rental market is in a “golden age” for owners, as The Wall Street Journal recently put it. In every respect, apartment performance in the latter half of 2021 was outstanding. Fundamentals were strong, the national vacancy rate ended the year at pre-COVID-19 levels, and rents shot up. The third and fourth quarter saw two of largest quarterly rent jumps in two decades. The national third quarter apartment rent increase measured a gargantuan 7.9%, 670 bps higher than the prior quarter. 

Returns data were also historic. Fourth-quarter NCREIF Property Index returns rose to the highest level in its 43-year history, while cap rate data plunged to their lowest level in history, according to SitusAMC research. Transaction data cemented the historic year end, with fourth-quarter deal activity exploding to the highest in history at $148 billion, per Real Capital Analytics (RCA). 

Despite this considerable momentum, SitusAMC Insights has identified five obstacles that could impede continued growth in the multifamily sector. Check out the slideshow to see the challenges ahead. 

 

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