Multifamily Rents Decline as Economic Slowdown and Seasonality Impacts Leasing

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Growth in asking rents in multifamily properties across the Baltimore MSA (metropolitan statistical area) has continued to decelerate in the 4th quarter of 2022. Rent increases typically decelerate during the later months of the year, as many households tend to move during the warmer seasons. This year, rent declines are also compounded by the economic slowdown as interest rates remain elevated, and job growth slows.

In the first half of 2022, apartment rents increased by roughly 4% in Baltimore, according to CoStar data, following a historic year in 2021 that saw double-digit growth. Rent increases typically start to mediate toward the end of the summer as leasing slows. As demand for apartments slows during these months, operators generally reduce asking rents and increase concessions.

Due to this, the average asking rent growth during the past 5 years is negative, at nearly -0.2%. However, this year, rents have declined by more than 1.5%, far greater than the average. This is due to the additional impact of the economic slowdown, with inflation elevated and consumer confidence declining.

Because of this, pricing power declines, and therefore, many renters choose to stay put during uncertain times. This has further reduced the amount of leasing this year, and rents have been impacted more severely.

However, despite these obstacles, rents in Baltimore are still up more than 2.2% year-over-year. And with vacancies remaining tight, this should help lessen further declines in the near term.

Source: CoStar

Cumulative Rent Growth Indexed to January 1st

Source: CoStar Daily Rent Series