U.S. Multifamily Outlook: Winter 2023

“Multifamily Outlook Hopeful Amid Volatile Economy

After two exceptional years of performance, multifamily rent growth began moderating in the fall, a trend that will carry into 2023 as housing demand and economic growth weakens. The U.S. economy enters the year in good shape in respect to many measures, but all eyes are on interest rates and how quickly inflation recedes. Economic growth will likely wane in the second half as the impact of rapid rate hikes takes effect.

Multifamily rent growth will be closer to its historical average in 2023. Nationally rents increased by 6.4% in 2022 after year-over-year growth peaked near 16% earlier in the year, per Yardi Matrix. This year we foresee rent growth dropping in half to 3.1% as demand lessens and deliveries remain high. Factors that drive demand include less migration, fewer new households, and declining affordability.”