Across America: Multifamily and Recent Migration Trends

Housing, Real Estate & Recent Migration Trends

The pandemic changed how people live in unprecedented ways. Changes in domestic migration and immigration patterns combined with economic shifts and a redefinition of how and where we work manifested in changes to the multifamily market. As interest rates and the economy stabilize, metropolitan areas that had boomed in both construction starts and population are slowing down—though demand for high-end A multifamily properties and single-family rentals (SFRs) remains strong. Real estate transaction activity is also expected to increase, opening the door to investment opportunities. 

Population trends 

Notable shifts in population occurred in 2020 and 2021, according to the U.S. Census. Counties with fewer than 30,000 residents saw net gains through domestic migration while outmigration from more populous counties, which began pre-pandemic, accelerated. Urban centers lost people to smaller, tertiary cities. Regionally, the South and the Rocky Mountains saw the largest population gains, while metro areas in the Northeast, Midwest and West Coast saw population losses. 

Though the pace of domestic migration has slowed and some gains and losses have even reversed since 2022, one region that emerged with net growth and newfound economic pull is the Southeast, according to a June 2023 Bloomberg article. Drawn to warm weather, employment opportunities, lower taxes and fewer regulations, approximately 2.2 million people have migrated to Florida and the Southeast since 2020, adding about $100 billion in new income and accounting for more than two-thirds of U.S. job growth—nearly double its pre-pandemic share. “The biggest difference in 2022 relative to 2019 is that in 2022, the population gains in Southern states grew larger, while losses increased in states along the Pacific coast and in the Northeast,” according to the Harvard University’s Joint Center for Housing Studies (JCHS) report The State of the Nation’s Housing 2023. 

The shifts in migration as well as in immigration—the largest source of population growth in nearly one-third of U.S. counties, according to the JCHS 2023 report—resulted in new housing demand in those areas. The number of renter households and new multifamily rental units also increased during the pandemic. JCHS estimated that 342,000 multifamily rental units—mostly targeting the high-end market—were added in 2022 alone. 

Impact on rental value 

From the end of 2022 heading into 2023, interest rates rose and investor activity in the housing market slowed. Population shifts also stabilized. According to JCHS, demand for rental units, along with increases in rent, moderated or decreased, particularly in the once-booming Southeast and Southwest markets.  

However, a little perspective is needed. Despite rent declines ranging from 3.5% to 5.9% year over year (YOY) in six major markets—Las Vegas; Phoenix; Austin, Texas; Jacksonville and Orlando, Florida; and Atlanta—rents overall were 17% to 30% higher in 2023 than in October 2019, according to FreddieMac’s 2024 Multifamily Outlook. 

This year, the U.S. News Housing Market Index expects multifamily home rents to stabilize and single-family home rents to increase slightly. However, the crush of multifamily starts in recent years will begin to enter the market, FreddieMac predicts in its report, tipping the supply bucket for the next two years: “Since 2022, completions are up 22% to 437,000 units annually as of the third quarter of 2023, a level not seen since the late 1980s and about 170,000 units more than the 2000-through-2019 annual average.” The highest levels of new supply are expected in the Sun Belt and Mountain West. Meanwhile, the limited multifamily growth and supply in the Midwest and Northeast regions will produce 2% to 3% increases in rent.  

As of December 2023, SFR prices overall remained strong, growing at 2.8% YOY, according to CoreLogic. Even in the Sun Belt region, average rents are expected to increase 5.2% to 8.8%, according to ResiClub. 

Multifamily Starts and Ownership Trends 

The recent surge of activity in multifamily starts is also leveling off. According to the U.S. Census Bureau and Department of Housing and Urban Development, the number of multifamily starts with five units or more dropped in January 2024 by a seasonally adjusted annual rate of 37.9% YOY. National Association of Home Builders chief economist Robert Dietz noted that the number of multifamily units under construction had been “near the highest level since 1973.” 

Multifamily activity does remain strong in several metropolitan areas. When looking at permitting activity per capita in 2023, Arbor Realty Trust identified several cities that notably exceed the major market median. These include Austin, Texas; Sioux Falls, South Dakota and several cities in North Carolina and Florida. Riverside, California, tops the list of multifamily permitting growth YOY, followed by Louisville, Kentucky and several cities in California and North Carolina. 

Over the last two decades, nonindividual investors have continued to increase their ownership stake in rental properties, according to the JCHS report America’s Rental Housing 2024. Between 2001 and 2021, this investor group, which includes LLPs, LLCs and real estate corporations, increased their ownership share of rental properties by 9% to 27% overall. This group also owns 83% of properties with 25 to 49 units and 93% of properties with at least 50 units, up 17% and 6% from 2001, respectively. During this same period, it also increased its ownership of SFR assets from 17% to 25%.  


Despite the slowdown of overall multifamily activity from recent record levels, many metropolitan areas continue to see movement. Additionally, greater demographic shifts have a role. As FreddieMac’s 2024 Multifamily Outlook notes, “Despite the short-term supply headwind, over the longer-term the multifamily market will continue to be supported by the overall shortage of housing, an expensive for-sale housing market, and the next generation of renters entering prime renter age.” 

Even with the surge in multifamily supply, investors are holding on to their multifamily investments, according to Marcus & Millichap’s 2024 Multifamily Investment Forecast. However, as inflation and interest rates level off or decline, the report predicts increased investor activity in 2024 with a continued focus on tertiary metros, which “face reduced supply pressure, while benefiting from cost-of-living motivated in-migration.” 

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