After a highly volatile April, the economy remained turbulent at the beginning of May. High inflation led the Fed to increase interest rates by 50 basis points, which resulted in major sell offs across the equity market. The Fed will likely continue tightening monetary policy despite the declining financial markets until inflation is brought back into a more normal range. While the stock market is making headlines, the employment market continues its strong growth, as roughly 428,000 new jobs were gained in April. Jobs were added across every major sector last month, and the unemployment rate of 3.6% indicates that the job market has returned to pre-COVID levels. If the employment market remains strong and inflation runs hot, the Fed will continue raising interest rates, which will likely lead to continued volatility in the stock market. Large funds may begin re-evaluating their allocations to different investment sectors, and given the recent strength and stability of multifamily, it would not surprise me to see additional inflows of institutional capital into our sector.
To that point, the multifamily sector continues its steady growth. Traffic and leasing were mostly flat last week, but occupancies and leased percentages increased modestly. NER continues to increase as the average NER for the top 25 metros approaches $2,000 per month. Rent growth will likely continue to decelerate but will not fall off completely as rising interest rates have made home buying difficult. Many would-be buyers are likely to remain renters in the short term.
Key Takeaways – Data as of 5/8/2022:
Traffic and Leases:
Occupancy and Leased Percentage:
Net Effective Rent:
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