Multifamily update? Zumper releases 2023 annual rent report, makes 2024 predictions

Yesterday, Zumper published its Annual Rent Report for 2023 which draws on the past year of data, knowledge of economic trends, Zumper surveys, internal data on renter search, and ongoing conversations with clients, experts, and others in the industry. All of this information offers a comprehensive view of the last year and a look at what’s to come in 2024.

Key Themes and Findings

There’s been a seismic shift in attitudes towards renting versus buying a home. Thanks to sky-high interest rates, an uncertain economic climate, changing priorities, and ongoing hybrid- and remote-work policies, consumer sentiment towards home ownership is at an all-time low. For the second year in a row, more than half of renters believe “the new American dream is being untethered to home ownership.” And more than 69 percent of renters said rising interest rates have deterred them from buying or looking into buying a home.

The national rent rate for a one-bedroom apartment is down year-over-year. At $1,496, the national one-bedroom median is down year-over-year by a tenth of a percent. This is a striking statistic, since year-over-year increases are typically a key barometer of healthy growth. The only other time Zumper reported negative year-over-year growth was during the pandemic.

The rental market strikes a more balanced relationship between supply and demand. While migration numbers settle down following a flurry of pandemic-era relocations, there is also a record number of new multifamily buildings coming online in many markets, which will help absorb demand from people opting out of buying a home.

Renters who move into a new home over the next six months will have more bargaining power. Property owners and managers are feeling the pressure, especially to lease up new builds. They’ll continue to offer concessions and move-in deals, which is reflected in the data, as there has been a 17 percent increase in listings offering deals on the platform since this summer.

Prices continue to decrease in many Sun Belt cities in a prolonged correction of drastic pandemic-era price hikes. This trend is most pronounced in some of the pandemic’s most popular Zoomtowns, including Miami, Phoenix, and Austin. Occupancy rates are declining in these areas, and prices will continue to fall as operators make concessions in an attempt to fill new buildings.

Several cities in the Intermountain region are nearing oversupply. Denver, Las Vegas, and Salt Lake City are also seeing record numbers of new supplies come to market, and we expect prices in these markets to fall more quickly than the national average. New developments in these cities also lean heavily towards luxury, which means 2024 will be a good time for renters to snag a deal on an amenity-rich apartment that may have been previously out of reach.

New York City will remain the most expensive and sought-after rental market. The city’s ongoing popularity and low supply will continue to spill over into neighboring areas as well. Last year, Zumper predicted Jersey City would be a city to watch. That metro has held steady as the number two city throughout 2023 and is in the midst of an ongoing construction boom.