In a new report, the real estate firm Walker & Dunlop calls it “the golden age for multifamily.”
High rents in the apartment sector are expected to continue in the new year as demand remains strong. Potential home buyers who have been shut out from the competitive housing market are turning to rentals in swarms. Property owners are expected to see record profits in 2022, predicts Green Street, a commercial real estate analytics firm.
Strong demand has allowed building owners to continue to increase their rents. Asking rents have climbed nearly 20% during the 12-month period in November, realtor.com®’s data shows.
The increase in rents is expected to lead to a 13.5% uptick in net operating income for building owners, which is expected to outpace the office, retail, lodging, and student housing sectors, according to the Green Street report.
But will tenants be able to weather the higher costs? “In a lot of these places, minimum wages have been rising, but not enough to keep pace with the rent growth,” Danielle Hale, chief economist at realtor.com®, told The Wall Street Journal.
Higher payments could prompt more people to move in with roommates or family. However, so far, property owners say they haven’t seen that happen.
“We see people staying put,” Thomas Grimes Jr., chief operating officer of Mid-America, a firm that specializes in middle-income buildings in the Sunbelt, said during an October earnings call. The company has reported it was raising rents by 13% for its renewing tenants.
Realtor.com® forecasts that asking rents will rise in 2022 at a rate of more than 7%. The cities with the highest gains in 2021 are expected to remain strong in the new year, including Austin, Texas; Miami; Memphis, Tenn; and Jacksonville, Fla.