By Valerija I. via CRE DAILY – Click here for more research and articles like this.
| A record wave of new apartment supply, paired with weakening job prospects for young renters, is shifting the rental market firmly in tenants’ favor—possibly for years to come. |
| Rent growth stalls: After years of steady increases, apartment rents are now barely moving. National average rent dropped 0.3% in September—the sharpest decline for that month in over 15 years, according to CoStar. While the Midwest and Northeast saw slight gains, Sunbelt and Mountain West cities like Austin, Denver, and Phoenix are seeing the biggest cuts as landlords race to fill new units. |
| Young renters struggle: The labor market isn’t helping entry-level renters. Unemployment among 20- to 24-year-olds hit 9.2% in August—twice the national average—prompting many to delay renting, move in with roommates, or return home. That softer demand is pushing landlords to offer even more incentives, including free rent, gift cards, and paid moving costs. |
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| Developers overshot: The post-pandemic building boom—especially in the Sunbelt—has created the biggest apartment supply wave in 40 years. But supply-chain delays pushed delivery timelines, bringing new units to market just as demand weakens. While leasing activity appears strong, it’s largely driven by heavy concessions rather than real pricing power. |
| Forecasts shift—again: Multifamily owners had hoped 2025 would be the year of equilibrium. Now, many are punting rent growth expectations to late 2026 or even 2027. Yardi Matrix recently revised down its rent growth forecast for 2027, citing ongoing supply momentum and tepid demand. |
| Margins under pressure: Weaker rent growth is helping cool inflation, especially with housing being a major part of the Consumer Price Index. But for landlords, stagnant rents, rising costs, and extended concessions are putting pressure on margins. |
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| ➥ THE TAKEAWAY |
| Soft climb ahead: The power dynamic in the rental market has shifted—and it’s sticking. With more apartments still coming online and job uncertainty clouding the outlook for young renters, landlords may be stuck in deal-making mode longer than anticipated. Until then, tenants should enjoy the rare upper hand—free rent, perks, and all. |
The above analysis of the market is another reason to make sure you have a strong commercial real estate agent focused on income producing properties in your corner. Whether it’s to help navigate the markets or vendor recommendations, valuations, rent studies, etc.
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