Rents Grow, Builders Strain: April Multifamily News Roundup
The Biggest April 2022 Real Estate News
We have summarized the biggest multifamily real estate from April of 2022. In April, rents continued to grow, builders struggled to keep up with demand, and environmentally-conscious apartment complexes continue to be popular with renters.
State of the Multifamily Market
According to the latest Yardi Matrix survey, the national average asking rent marked new record highs in March, though it’s expected that rent growth will moderate below 2021’s breakneck pace. The average U.S. growth rate slid 50 basis points to 14.8 percent on a year-over-year basis, bringing the overall average rent to an all-time high of $1,642, up $14.
Multifamily market growth is curbed by two main factors: inflation and the war in Ukraine. To control the former, the Federal Reserve is increasing interest rates, which led the 10-year U.S. Treasury rate in late March to yield 2.4 percent. Signs point to further increases in the near future.
Demand Outstrips Building Industry Capacity
The building industry is struggling to respond to demand for new construction. The new Construction Quarterly Survey by the National Multifamily Housing Council found that 89% of builders are experiencing construction delays. Of those builders experiencing delays, 85% reported delays in both starts and permitting.
NHMC noted that the problems that first originated during the onset of the pandemic—supply chain problems, materials and labor shortages, and permitting and entitlement delays—continue to plague the industry, and call for federal assistance. A majority of respondents said that deals have been repriced over the past three months, with prices increasing 25% on average.
Interest in Green Buildings Grows
Environmentally conscious design is a priority for today’s multifamily residents, who demand clean air, energy-efficient buildings and open green spaces. Developers have begun to respond to those demands. A recent report from the National Association of Home Builders records that 36 percent of multifamily developers are building green projects. UDR and Essex Property Trust marked Earth Day with the announcement of a new ESG fund that will make apartments more energy efficient and climate friendly as well as more affordable, healthy and safe.
Efficient and sustainable projects can save costs and require fewer materials. Interest in unconventional building options like mass timber, passive house, modular building, and net-zero continues to grow quickly. Alternative energy sources such as geothermal, solar and all electric power are all of interest in redeveloping multifamily properties and in new construction projects.
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