When Apartment Demand Slows, the Nation’s Heartland Shines

Midwest apartment markets shine the brightest during downturns. The slow-and-steady nature of these markets doesn’t seem as glamourous when the U.S. overall is experiencing surging fundamentals. But when performance softens in the nation overall, the nation’s heartland stands out in strength and resilience. In 2020, when the nation’s housing market was hit hard by the COVID-19 pandemic, the Midwest outperformed the flailing Gateway markets and stayed relatively in line with the Sun Belt. In 2021, Sun Belt market performance really took off, with new lease trade-out peaking at over 20%, leaving the Midwest to its slow-and-steady pace around the 10% mark. When the Gateway performance bounced back and hit a performance peak near 19% in 2022, the Midwest continued to log a solid – but less flashy – expansion, closer to 16%. In 2023, as moderation has become widespread across the U.S., the Midwest performance has snuck ahead of the Sun Belt and Gateway markets. New leases are now signing for almost 7% more than the previous lease in the Midwest, a few ticks ahead of the Gateway and Sun Belt.

For more information on the state of the Midwest apartment market, including forecasts, watch the webcast Market Intelligence: Q2 Midwest Update.