Multifamily rent growth comes from the suburbs
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Both short- and long-term data show that rent growth in the suburbs has far outpaced that in the inner cities since the health crisis began, and even before, according to a latest report from Apartment List .
Across 39 metropolitan areas nationwide, the company found that since March 2020, suburban rents have grown by an average of 27.2%, far higher than the 19.8% recorded by the urban markets they surround.
Similarly, Yardi Matrix data shows that a growing number of suburbs (170 to be exact) that had a majority of homeowners 10 years ago are now dominated by a renter population, suggesting that increased demand may continue to drive rents higher.
Furthermore, between 2010 and 2019, the number of renters in the suburbs increased by 22%, compared to only 3% for the number of homeowners in those same areas.
The gap between urban and suburban markets is narrowing.
The rent gap between urban and suburban areas has narrowed, as has the gap between the major U.S. port cities (New York, Los Angeles, etc.) and the Sunbelt cities (southern U.S., primarily Florida and Texas).
Today, about 21 million people rent in one of the suburbs of the 50 largest U.S. cities, 3.7 million more than a decade ago.
According to Census Data, most of these renters are from the millennial and Gen. Z, who are looking for options that fit their budgets. In fact, 55% of suburban renters are under the age of 45 and have a median salary around $50,000.
Rents that soared during the pandemic.
Whenconditions changed abruptly in 2020, the largest cities saw rents decline rapidly. At the same time, suburban rent growth began to sustainably outpace that of urban markets to solidify a trend that now extends well beyond the disruption of the pandemic.
Already in 2019, suburban rent growth was 3.1% per year, compared to 2% for major U.S. cities.
The report also points to the growing share of telecommuting within companies, which is helping to reinforce this trend.
Source: Apartment List, Yardi Matrix, Census Data, GlobeSt
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