Freddie Mac’s annual Multifamily Outlook report foresees rent rising by 3.6% across the US in 2022. “Given the robust demand for housing this year, we believe that upward price pressure for both rental and for-sale housing will continue in the short term as we continue to experience an overall housing shortage across all housing types,” the report noted. Furthermore, as CPI data is lagged, the sharp increase in rent prices has not fully factored in inflation. “We believe the sharp increase in housing costs captured by the CPI over the past two months is likely just the beginning.”
The report stated that consumers believe inflation will decline over the next five years, but expectations for 2022 have increased by 50 bps to 3%. For the 12 months ending in October 2021, rents increased 14.9% on average. The report noted additional contributing factors for rising demand:
- Renters who would have moved last year who did not due to the pandemic
- Two years’ worth of college graduates who are leaving home for the first time
- Professionally managed units (which this data is derived from) were more able to adapt to changing conditions brought on by the pandemic than smaller operators and therefore more likely to capture the demand than smaller operators
- A reallocation of budget toward housing from government stimulus or cutting other expenses during the pandemic
- Former roommates choosing to live on their own
High-density areas that already experienced a pandemic exodus are expected to have the lowest growth rates. Rent is expected to drastically rise above the national average in the following cities:
- Phoenix: 7.6%
- Las Vegas: 7.0%
- Tampa, Fla.: 6.9%
- Tuscon, Ariz.: 6.5%
- Albuquerque, N.M.: 6.2%
- Atlanta: 5.9%
- Sacramento, Calif.: 5.8%
- Riverside, Calif.: 5.7%
- West Palm Beach, Fla.: 5.5%
- Fort Lauderdale, Fla.: 5.2%
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