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Report: National Apartment Rent Growth Likely to Be Negative

The period of double-digit multifamily rent growth that marked 2021 and part of 2022 will likely screech to a halt in 2023. Origin Investments’ forecast from February 2023 to January 2024 calls for negative rent growth by as much as 2%. This would mark the fourth largest rent decline in U.S. history. Only World War I, the Great Depression and Great Financial Crisis experienced lower rent growth.

But the forecast also noted that the negative rent growth would likely be a blip, with rents turning positive again in 2024. “One year of negative rent growth doesn’t mean the sky is falling,” said David Scherer, co-CEO, Origin Investments, in a press release. “We’ve seen double-digit rent growth over the last two years and we’ve known, given historical trends, that this wasn’t normal or sustainable. What we’ll be seeing in 2023 is a logical correction.”

Origin Investments’ Assistant Vice President Phil Schuholz indicated that factors likely to put downward pressure on rent growth include the following:


According to RealPage, 426,000 units delivered in 2022. Meanwhile, Berkadia estimates that 565,000 units will come online in 2023. In 2024, up to one million units might be delivered. This new supply has been driven by the extreme need for more housing units and a zero Effective Federal Funds Rate approximately three years ago. This helped drive financing for new projects, though rising interest rates are keeping current developments in check.


It’s no secret that the rent affordability ratio has been increasing, reaching 31.67% in 2022, according to Origin Investments’ data. Shuholz suggests that one scenario could be that renters might lease larger, two-bedroom apartments, and take on roommates. This means that owners delivering new one-bedroom units might need to offer more concessions and lower rent rates to attract tenants.

Origin Investments also noted that negative rent growth will impact net operating income levels, along with debt service obligation increases and higher inflation. This could lead to a pricing correction for both owners and investors.

“As investors and fund managers, now is not the time to put your head in the sand,” Scherer said. “This is an environment that we see creating acquisition opportunities. But success requires a long-term outlook, and we believe that information, along with informed decision-making, leads to better investment outcomes.”


Inside The Story

Origin InvestmentsOrigin Investments' David SchererOrigin Investments' Phillip Schuholz

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