THE MOST NEW SUPPLY TO HIT THE MARKET SINCE THE MID-1980S.
When demand in the multifamily market spiked in the first year of the pandemic, developers accelerated plans for new projects. Now, two years later, many of those developments are set to deliver this year. The national forecast projects almost 520,000 new units to be delivered in 2023, the most new supply to hit the market since the mid-1980s.
Fifteen markets are projected to hit new record deliveries in 2023 and Sun Belt locations make up 10 of those markets. These record deliveries are arriving at the exact same time demand remains weak, putting several of these 15 markets at significant risk of worsening fundamentals by the end of the year.
In the end, 17 major multifamily markets are projected to end the year in negative rent growth territory and 80% of the above markets won’t meet their pre-pandemic five-year rent growth average. Midwest and Northeast markets with minimal new construction are forecasted to witness the best rent growth by the end of 2023 which is quite a surprise for an industry that typically pegs these regions as the laggards.
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