written by Jay Parsons – Realpage – click here for full article
U.S. apartment occupancy rates have been on a roller coaster ride these past few years — shooting way up to record highs in 2021 and early 2022, only to then drop off at the fastest pace in more than a decade. Now, there are some signs that apartment occupancy just MIGHT be stabilizing here in 2023.
This chart shows the month-over-month change in occupancy (without seasonal adjustments). While it’s true that occupancy is highly seasonal, the pandemic era erased normal seasonality. For example, we saw occupancy surge upward last winter (very not normal seasonality), only to then drop hard in the peak leasing seasons of spring and summer (extremely not normal seasonality).
So it’s not immaterial to now see occupancy rates stabilizing just under 95% — which is back around the long-term averages.
Why is that happening? Remember: We saw an unprecedented event in 2022 (and 2021 and 2020 for that matter, but let’s focus on 2022-23 right now). In 2022, we saw very little demand for ANY type of housing DESPITE one of the best-ever years for job growth and wage growth. We’ve made the case that it was due to low consumer confidence — making people nervous; and when we’re nervous, human nature is to do nothing, to stay put. Now we’re seeing some tepid steps toward normalcy, with housing demand returning to the market as consumer inflation cools off a bit.
Barring a big change in the economy, we’d expect demand to continue to rebound this year… yet not fully keep pace with the multi-decade high in supply, which should mean further inching down of occupancy this year. This is the year when renters will have a lot more options — which means property managers have a lot more competition.
#apartments #multifamily #rentalhousing #housing #DPCRE #occupancy #vacancy #concessions #classA #classC #classB
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