Another big year. That’s what Yardi Matrix is predicting for the U.S. multifamily market in its 2022 National Multifamily Outlook, released earlier this week.
Just don’t expect another quite as strong as 2021. As Yardi Matrix says, last year was an exceptional performance for the multifamily market. And while Yardi Matrix researchers say that this year will be a strong one, too, 2022 might not match the highs this sector saw in 2021.
Yardi Matrix’s 2022 outlook predicts that demand for apartment units will remain robust throughout the year. The company points to strong economic growth and household formation as two reasons for this.
What does the future hold for this sector, then? No one at Yardi Matrix is predicting that apartment asking rents will rise 13.5 percent this year. That’s how much rents rose in 2021. But Yardi Matrix is predicting a still-strong increase of 4.8 percent in asking rents this year. That number might seem small when compared to what the sector saw in 2021, but it’s still above the long-term 2.7 percent increase in asking rents that the sector typically sees.
Why the optimism? Yardi Matrix says that the conditions that drove higher apartment rents in 2021, including pent-up demand coming out of the COVID-19 pandemic, strong job growth, rising home prices and healthy consumer savings, are still largely in place as 2022 starts.
Absorption hit record levels in this sector last year, causing occupancy rates to flirt with all-time highs. Because of this, concerns about too much supply have become moot and developers are bringing plenty of new apartment projects to the market.
As of the beginning of 2022, more than 750,000 market-rate apartment units were under construction across the country, Yardi Matrix reports. Yardi Matrix researchers say they expect about 385,000 to 400,000 new apartment units to hit the country this year.
Not surprisingly, given the strength of the sector, last year saw a boom in multifamily transactions. Yardi Matrix said that there were $166 billion of multifamily transactions in the United States in 2021, up 75 percent from what the sector saw in 2020. Yardi Matrix is predicting another big year in 2022 for multifamily transactions.
