Welcome to the December 2022 Apartment List National Rent Report. Our national index fell by 1 percent over the course of November, marking the third straight month-over-month decline, and the largest single month dip in the history of our index, going back to 2017. The timing of the recent cooldown in the rental market is consistent with the typical seasonal trend, but its magnitude has been notably sharper than what we’ve seen in the past, suggesting that the recent swing to falling rents is reflective of a broader shift in market conditions beyond seasonality alone.
Rising interest rates have dampened apartment investment activity, but sales remain solid. Though current sales were below the peak from three quarters ago, transactions have remained at 20-year highs for much of the past two years.
The St. Louis apartment market continued at its typically stable pace in 3rd quarter, holding onto demand and logging historic rent growth while fundamentals softened in many markets in the U.S. Just like what was seen across much of the nation, demand faded in St. Louis in 3rd quarter 2022. However, this typically stable Midwestern market maintained positive absorption in the July to September time frame, logging demand for just 171 units.
ATTOM, a leading curator of real estate data nationwide for land and property data, today released its third-quarter 2022 U.S. Residential Property Mortgage Origination Report, which shows that 1.97 million mortgages secured by residential property (1 to 4 units) were originated in the third quarter of 2022 in the United States. That figure was down 19 percent from the second quarter of 2022 – the sixth quarterly decrease in a row – and down 47 percent from the third quarter of 2021 – the biggest annual drop in 21 years.
CoreLogic®, a leading global property information, analytics and data-enabled solutions provider, today released its latest Single-Family Rent Index (SFRI), which analyzes single-family rent price changes nationally and across major metropolitan areas. Consistent evidence of a single-family rental market cooldown follows nearly two years of above-trend rental price hikes. Year-over-year single-family rent growth slowed for the fifth consecutive month in September 2022 to 10.2%, down from a high of 13.9% in April 2022.
Last week, Federal Reserve Chair Jerome Powell dove into the debate over rent inflation and suggested that while new lease rent growth is slowing, “there’s still some significant (rent) increases coming” via cheaper lease renewals hiked up to market level. But RealPage data show that’s NOT exactly true for market-rate apartments. U.S. apartments plunged back to the long-term average in “loss to lease” – which means the runway for renewal lease rents will significantly narrow going forward.
According to ATTOM’s Q3 2022 U.S. Home Equity & Underwater Report, 48.5 percent of mortgaged residential properties in the U.S. were considered equity-rich in the third quarter. The report noted that figure was up from 48.1 percent in Q2 2022 and 39.5 percent in Q3 2021. ATTOM’s latest home equity and underwater analysis also noted the latest increase fell below other gains in recent years, but still marked the 10th straight quarterly rise, and resulted in virtually half of all mortgage payers landing in equity-rich territory.
U.S. apartment rents cooled for a second straight month behind weak demand. October’s cut ranked as the third largest since 2010, topped only by the COVID-era lockdown period of April and May 2020. Same-store effective asking rents for market-rate apartments dropped 0.6% in October. Cuts are seasonally common in September and October, but 2022’s reductions are notable – even if not terribly surprising – for a couple reasons. First, normal seasonal patterns have been obscured since COVID hit in 2020.
Home price appreciation dropped in July for the first time since December 2018, ending a 40-month streak of growth. But depending on the statistic referenced, this decline could be considered either an extreme or minor correction. One of the most widely-cited industry metrics for home price changes is the median sales price, which determines trends based on the midpoint of all houses sold in a given market. By contrast, repeat sales indexes, such as CoreLogic‘s Home Price Index (HPI) and the CoreLogic S&P Case-Shiller Index, measure appreciation based on the difference between the price of a home now versus its previous sale.
Since the beginning of 2022, multifamily building permits and starts have comprised a larger share of total residential construction, according to the U.S. Census Bureau’s monthly report. Single-family permitting has declined for six consecutive months, from an annualized rate of 1.2 million homes in February of this year to just 872,000 units in September. Year-over-year, single family permitting is down more than 17%. Meanwhile, multifamily permitting has remained fairly steady, averaging 634,000 units since January and reaching an annualized rate of 644,000 units in September – up 25.5% from September 2021.
The CoreLogic Home Price Insights report features an interactive view of our Home Price Index product with analysis through September 2022 with forecasts through September 2023. CoreLogic HPI™ is designed to provide an early indication of home price trends. The indexes are fully revised with each release and employ techniques to signal turning points sooner. CoreLogic HPI Forecasts™ (with a 30-year forecast horizon), project CoreLogic HPI levels for two tiers—Single-Family Combined (both Attached and Detached) and Single-Family Combined excluding distressed sales.
Welcome to the November 2022 Apartment List National Rent Report. Our national index fell by 0.7 percent over the course of October, marking the second straight month-over-month decline, and the largest single month dip in the history of our index, going back to 2017. These past two months have marked a rapid cooldown in the market, but the timing of that cooldown is consistent with a seasonal trend that was typical in pre-pandemic years. Going forward it is likely that rents will continue falling in the coming months as we enter the winter slow season for the rental market.
Ask anyone on the acquisitions side of the table who is active in the nation’s Sun Belt set of markets and they’ll be among the first to tell you how much more competitive the landscape is today than ten or even five years ago. This increase is something of a double edge sword. From one perspective, the rise in attention has increased liquidity within the region among other positive factors. From another perspective though, it means rising purchase prices and generally tighter cap rates.
In about a third of the nation's largest apartment markets, there have never before been this many units under construction. Over 917,000 units are currently under construction across the U.S., which will increase the nation’s existing apartment base by 4.9%, according to 3rd quarter data from RealPage Market Analytics. This is one of the biggest volumes the nation has ever seen (bested only by the 924,000 units that were under way just one quarter ago).
With the 2022 midterm elections in less than two weeks, economic issues are taking center stage. Throughout this year, inflation has been running at its hottest pace in four decades, and there are growing fears that the Fed’s efforts to push back could induce a recession in the year ahead. Skyrocketing housing costs have been a key component of inflation, and one that could constitute a wedge issue between renters and homeowners. Most homeowners are locked into fixed monthly mortgage payments, and for those that already owned at the start of the pandemic, quickly rising home values have been primarily experienced as a boon to their net worths.
Record-high home prices and rising mortgage rates have shut out a number of potential buyers, and the reduced competition gives other shoppers more time to house hunt before making an offer. Figure 1 shows the median days on market before a listing enters pending status for the month of September of each year since 2000. As of September 2022, the median days on market before pending was 19 days, which is eight days more than the median time in September 2021. However, it’s still less than one-third of the 20-year[\[1\]](https://www.corelogic.com/intelligence/the-pace-of-home-sales-slows-as-mortgage-rates-pick-up/#ftn1) average of 35 days before the pandemic.
Detroit’s apartment market has made notable progress in recent years, evolving into a period of rapid growth after decades of turmoil. While demand has recently slipped, Detroit is preparing for an economic future that can sustain strength in a time of change. First, a history lesson. Roughly 20 years ago, Detroit’s housing market felt abandoned. Single-family homes were going for cents on the dollar.
CoreLogic®, a leading global property information, analytics and data-enabled solutions provider, today released its latest Single-Family Rent Index (SFRI), which analyzes single-family rent price changes nationally and across major metropolitan areas. U.S. single-family home rental costs posted an 11.4% year-over-year increase in August, marking the fourth straight month of annual deceleration. Even so, rental costs remained elevated, with annual growth running at about five times the rate than in August 2020 in the midst of the COVID-19 pandemic.
The U.S. apartment market was fundamentally changed by the COVID-19 pandemic. But how the pandemic affected apartment rents depends largely on one thing – location. Apartment markets across the U.S. have experienced unprecedented rent change performances since the onset of the pandemic, with extreme differences in rent change levels over time and among regions and markets. Since the beginning of the pandemic, the worst moment was in late summer/early fall 2020, when annual effective asking rent cuts bottomed out at 1.5% nationwide.
The nation's student housing apartment market landscape has seen a lot of ups and downs over the last couple of years. For all the uncertainty brought by the COVID-19 pandemic, the industry rebounded swiftly to set records for rent growth and occupancy in Fall 2022. With such stellar student housing performance throughout the Fall 2022 pre-lease season, concession utilization never really manifested, according to data from RealPage Market Analytics.
