As the first light of 2024 touches the skyline of Austin's burgeoning apartment communities, a subtle shift is felt in the realm of multifamily properties. The past couple of years have seen a deceleration in rent growth, cooling off from a record high of 10.7% at the beginning of 2022 to a tepid 0.7% by the end of 2023. The cause? An influx of new supply outstripping demand, leading to a rise in vacancy rates. However, as we step into 2024, the tides may be turning, setting the stage for a resurgence in rent growth (Lybik, CoStar Analytics).


The Forecast for 2024: A Detailed Look

The National Picture

The narrative of multifamily rent growth in 2024 is one of cautious optimism. While the year might start with national rent growth still hovering below 1%, a predicted pullback in completions by 20% to the mid-400,000 range coupled with a bolstered demand—should the economy sidestep a recession—hints at an impending acceleration. This potential rise in rent is particularly pronounced in three-star properties, which closed 2023 with a 1.5% growth despite the general market slowdown. Their resilience to oversupply conditions at higher market tiers positions them as likely leaders in the upcoming upswing (Lybik, CoStar Analytics).

The Geographical Divergence

Diving deeper into regional forecasts, the Sun Belt, a star in pre-pandemic times, faces a slower recovery due to significant oversupply. Markets like Austin might not see a positive annual rent growth until the latter part of 2024. Contrastingly, the Midwest and Northeast appear poised for a quicker rebound, potentially leading the charge in rent growth expansion (Lybik, CoStar Analytics).

Market-Level Rent Resurgence

The year could also mark a return to form for all major multifamily markets, with predictions pointing towards a universal shift back to positive rent growth by year-end. This is a stark change from the 22 major markets that ended 2023 on a negative note. If the forecasts hold true, approximately 26 major markets might exceed their five-year pre-pandemic annual average growth rates, signaling a robust entry into the growth expansion phase (Lybik, CoStar Analytics).

Conclusion: The Path to Recovery

As the multifamily rent market steps into 2024, it stands at a crossroads. The potential for recovery and expansion is tangible, driven by a combination of decreased completions and an anticipated rise in demand. While the national outlook is one of cautious optimism, regional variations highlight the uneven path ahead. The Sun Belt, once a beacon of growth, now braces for a slower ascent, while the Midwest and Northeast ready themselves for a quicker climb. The year ahead is not just about stabilization; it's about setting the foundation for a robust recovery, promising a brighter future for multifamily rent growth (Lybik, CoStar Analytics).

In watching these trends unfold, stakeholders from investors to renters would do well to keep a keen eye on the evolving landscape. 2024, with its potential for reversal and recovery, could well be a defining year for multifamily properties, heralding a new era of growth and prosperity.

​Source: "What To Watch in 2024: Multifamily Rent Growth Could Begin To Accelerate Later This Year" by Jay Lybik, CoStar Analytics, January 1, 2024.