A Snapshot of the Pacific Northwest Multifamily Housing Market

In September 2022, the U.S. rental market experienced single-digit growth for the second month in a row. The median rent growth across the top 50 metros slowed to 7.8% year-over-year. It is the lowest growth rate in 16 months but still more than 2X faster than the growth rate seen just before the pandemic hit in March 2020.

The increase in interest rates is now affecting the demand for rental housing. With fewer renters leaving the rental market for homeownership, vacancy rates continue to remain low, keeping rental price growth elevated but still off the highs of previous months. We are starting to see moderation in asking rents. The in-place rents (tenants currently in a lease) will likely have significant rent increases ahead of them before they catch up to the growth in the asking rents we’ve seen. Inflation is effectively outpacing the wage growth renters have seen over the past 18 months and we may begin to see delinquency rates climb higher in 2023.

Builders are still ramping up multifamily production and the supply of housing in 2023 is predicted to increase, albeit not enough to tip the scales significantly. The increase in interest rates for permanent financing on new apartments in 2023 may necessitate higher rents in order to capture the original return most builders projected early on, just one more reason rent growth will continue.