Top 10 Emerging Multifamily Markets in 2024

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Fewer Deaths, More Migration Make U.S. Population Soar link

• The U.S. population grew by over 1.6 million in 2023, marking the largest increase since 2018. This growth is attributed to fewer deaths and a rise in migration, reversing the trends seen during the COVID-19 pandemic.

• Texas, Florida, North Carolina, and Georgia experienced the highest population growths. These states' growth underscores the South's position as the nation's most populous region, further amplified by migration trends.

• States like New York, California, and Illinois saw the lowest population growth, primarily due to a decrease in domestic migration. Despite this, they still attracted international residents, highlighting a trend where global real estate buyers opt for larger states but are deterred by affordability issues.

Record New Supply Is Expected to Inhibit Rent Growth in 2024 link

• The influx of new multifamily housing supply is set to dampen rent growth nationally, with some markets potentially seeing slight negative growth. In 2023, national average asking rents increased by 1.6%, but cities like Las Vegas, Boise, Phoenix, and Austin experienced the most significant declines.

• Upscale lifestyle units dominate the new supply, yet the working-class "renter-by-necessity" segment is expected to see stronger growth. This indicates a shift in market dynamics, where luxury offerings may not be the primary driver of rent increases.

• Despite a modest recovery in consumer confidence, economic indicators such as falling bank balances, record-high credit card debt, and increasing delinquencies suggest a cautious outlook. Yardi predicts a modest 0.8% growth in average national asking rents in 2024, with a return to normal growth rates of 3% to 4% post-absorption.

Top 10 Emerging Multifamily Markets in 2024 link

• The multifamily market is advancing into 2024 with challenges like rising inflation, interest rates, and a looming economic slowdown. Despite these, there's a significant supply with 1.2 million apartment units under construction at the start of 2024.

• Omaha, Nebraska, leads the 2024 rankings for emerging multifamily markets, showcasing strong demand with 8,000 units under construction and a high occupancy rate of 96.0% as of November 2023.

• The most expensive market in the list is Long Island, NY, with an average price per unit at $480,769 in December 2023, indicating a 13.8% year-over-year increase. This highlights the diverse affordability and investment opportunities across the emerging markets.

Home Prices Are Still Rising in 85% of U.S. Cities link

• Home prices surged in the majority of major U.S. metros in Q4 2023, with the national median price for an existing single-family home reaching $391,700, a 3.5% increase from the previous year. Some markets even saw double-digit gains.

• Despite the rise in home equity for about 85 million homeowners, many buyers are facing sticker shock with typical monthly mortgage payments doubling from $1,000 three years ago to more than $2,000 last year. This has contributed to a general dissatisfaction about the economy.

• California remains the most expensive state for home prices, with eight of the top ten priciest markets located there. San Jose-Sunnyvale-Santa Clara leads with a median price of $1,750,300. Affordability pressures continue, but the situation may improve with declining mortgage rates and increased homebuilding expected in 2024.

Short-Term Rentals Poised for Post-Pandemic Comeback link

• The short-term rental market faced a slump in 2023 but is expected to rebound strongly in 2024, with Henderson, Nev., leading in ROI at $31,706 per property. Cities like Jersey City, N.J., and Boston are anticipated to have the highest occupancy rates, at 69%.

• After explosive growth in 2021 and 2022, 2023 was a correction year for short-term rentals, impacted by inflation and natural disasters. However, demand remains strong in small to midsize cities, with Texas cities like San Antonio and Austin seeing an uptick.

• Despite a slow recovery in urban areas due to competition and regulations, overall demand for short-term rentals is predicted to rise starting this spring. This is attributed to wages growing faster than inflation, boosting consumer purchasing power.

More than 18 million rental units at risk from climate hazards as extreme weather becomes more common, Harvard study finds link

• Over 18 million U.S. rental units are exposed to climate and weather-related hazards, highlighting a growing risk for renters. The study by Harvard University's Joint Center for Housing Studies used FEMA's National Risk Index and data from the American Community Survey to identify units at risk from environmental hazards like wildfires, flooding, and hurricanes.

• In 2023, the U.S. experienced a record high of 28 weather and climate disasters with damages totaling $1 billion or more, costing an estimated $92.9 billion. This increase in frequency and severity of climate hazards places renters, especially those in low-rent or subsidized units, in vulnerable positions due to limited mobility and financial means to mitigate risks.

• The study emphasizes the need for greater investment in housing stock upgrades to improve resilience against environmental hazards. Manufactured housing units, which represent a significant portion of at-risk rentals, are particularly susceptible to damage from extreme weather, underscoring the importance of enhancing building standards and tenant insurance coverage to protect against future disasters.