Today, in the Calculated Risk Real Estate Newsletter: Apartments: Net Absorption Very Low in Q3, New Construction Deliveries Even Lower
A brief excerpt: Moody’s Analytics also reported the effective rents were up 1.7% in Q3 from Q2, and up 10.2% year-over-year (YoY). This is a sharp slowdown from Q2 when rents were up 16.9% YoY.
Last week, I posted a graph of the year-over-year change for various measures of rent. The Zillow measure is up 12.3% YoY in August, down from 13.8% YoY in July. This is down from a peak of 17.2% YoY in February. The ApartmentList measure is up 7.5% YoY as of September, down from 9.8% in August. This is down from the peak of 18.0% YoY last November.
Reis’ survey (dashed red) is quarterly and shows a similar slowdown in effective rents.
The bottom line is apartment demand was soft in Q3, household formation has slowed sharply, and there are a large number of apartments in the pipeline. We should see completions above net absorption soon, and the completion of all these units under construction should help with rent pressure. There is more in the article. You can subscribe at https://calculatedrisk.substack.com/