With historically record high apartment rental rate increases in 2021, apartment rental rate growth continued its aggressive streak during the first half of 2022 with year-over-year rent growth remaining above 20%. Now that the second half of 2022 is upon us, tapering of the rental growth rates is finally starting to occur even in the face of high overall inflation.
“We knew 2021 was going to be a record year for rental rate growth and record high apartment occupancies primarily due to anticipated supply and demand imbalances” said Joel Sanders, Founder & CEO of Apartment Insiders, “However, it was difficult to pinpoint just how long those record-shattering figures would sustain themselves and when or if they would subside in 2022. We are finally seeing some data telling us that the peak has probably came and went. Apartment rents probably won’t go down and will continue to increase, just not at such a fast pace.”
A large amount of new market rate apartment supply is about to hit the lease up market over the next 12 months, especially in markets such as Nashville. There is also concern that overall price inflation in the cost of goods and services other than housing could slow demand through weaker household formation than has been experienced over the previous 18 months. Many new communities have been under development, but the supply chain and labor shortages that delayed their deliveries are finally working themselves out.
“At Apartment Insiders, we haven’t seen it be one specific issue delaying apartment rental deliveries. It really seems to vary project-by-project. Some may have challenges getting window, cabinets, or appliances for example. Other may be able to get the product, but can’t find someone to install them. Delays in any of those areas will slow down delivery of the entire apartment community to the leasing market.” said Sanders.
Nashville’s apartment construction market remains robust as percentage of current inventory with about 19,000 units currently under development and another 65,000 units in various planning and permitting stages.
About Apartment Insiders
Apartment Insiders is a Nashville, Tennessee-based real estate brokerage founded by Joel Sanders who pioneered Nashville’s apartment locating industry since 2016. Apartment Insiders specializes in taking the stress out of apartment searching by connecting apartment seekers with their perfect apartment through a hyper-personalized approach combined with superior market intelligence. The service is completely free to apartment residents as the company is paid a marketing fee from the apartment community where a client leases. Apartment Insiders partners with hundreds of apartment communities in the Nashville area. https://apartmentinsiders.com/