CHM Blog

Multi Family Rents Up 13.5% in 2021

According to Yardi Matrix data, rents in the multi-family sector grew at a 13.5% pace in 2021 which was more than double 2020s pace.

Overall, 2021 was a year of records for the U.S. multifamily market, according to Yardi Matrix’s survey: The annual rent growth of 13.5 percent was more than double any previous year, and apartment absorption counted nearly 600,000 units, which is roughly 50 percent more than the previous annual high, set in 2015. The single-family rental market continued to overperform the multifamily sector.

Throughout 2021, the average U.S. asking rent gained $190 and 2022 is forecasted to bring further gains in the multifamily market, at least by historical standards, but at a moderated pace, close to 5 percent annual increases. Possible headwinds include inflation and a new wave of COVID-19 cases.

On an annual basis through December, rents increased by double-digit percentages in 26 of the top 30 metros, six of which posted gains of 20 percent or more: Phoenix (25.3 percent), Tampa (24.6 percent), Miami (23.5 percent), Orlando (22.7 percent), Las Vegas (22.2 percent) and Austin (20.9 percent). In part, these exceptional rates are actually smaller because rent growth was generally flat in 2020. However, in some areas the jump is notable, such as in New York, where, after 14 months of negative rent growth, rents rebounded in July marking a 14.2 percent increase year-over-year in December.

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market.  This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events.  When MBS pricing goes up, mortgage rates or pricing generally goes down.  When they fall, mortgage pricing goes up.  Tracking these securities real-time is critical.  For more information about the rate market, contact me directly.  I’m among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Higher

Mortgage rates are moving higher today. The MBS market worsened by -157 bps last week. This was enough to increase mortgage rates or fees. The market experienced high volatility last week.

This Week's Rate Forecast: Higher

Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) The Fed, 2) Inflation and 3) Retail Sales

1) The Fed: Now that the bond market has moved up its expectations on when the Fed will begin to reduce its massive balance sheet as well as expectations for 3 to 4 rate hikes this cycle and their MBS bond buying program that is part of their pandemic QE ending in March. Here is this week's schedule:

01/10 Bostic

01/11 Powell, George, Mester, Bullard

01/12 Atlanta Fed Business Inflation Expectations

01/13 Harker, Brainard, Evans

01/14 Williams

2) Inflation: We get several inflationary data points this week with CPI and PPI taking center stage with YOY levels expected to break last month's records.

3) Retail Sales: Other than CPI and PPI, the most important economic release of the week will be Friday's Retail Sales data.

Treasury Dump:

01/11 3 year note

01/12 10 year note

01/13 30 year bond.

This Week's Potential Volatility: High

This morning we're seeing last weeks negative trend continue as banks begin hedging their expectations. Volatility is high as the none stop sell off starts to conflict with some market pressures.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

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