Rent Cuts Found in Nation’s Highest Supply Submarkets
As rent growth is a byproduct of supply and demand, the apartment markets adding the most new supply are also the ones most likely to be cutting rents. That relationship has been on display throughout the current supply wave, and it becomes even more apparent when drilling down to the neighborhood level.
Among the nation’s 50 largest apartment markets, RealPage Market Analytics tracks 706 individual submarkets. Of those 706 submarkets, 16 have seen total apartment inventory grow by at least half since the onset of the pandemic in 1st quarter 2020. Unsurprisingly, these fast-growing submarkets are overwhelmingly located in the Sun Belt where demographic tailwinds from the past few years favor housing demand of all types.
Those same submarkets were more likely to be cutting rents, compared to marginal rent growth nationally of 0.3% in the year-ending October. In fact, of the 16 submarkets where inventory has grown by half or more since the pandemic, all but one reported rent cuts on an annual basis as of October. The lone exception was Washington, DC’s Navy Yard/Capitol South where rents were growing 2.3% annually as of October. Still, that falls well below the market average of 3.3% in DC.
In Austin’s Cedar Park, rents have been cut 11.2% in the year-ending October 2024, which underperformed marketwide rent cuts of 8.1% in Austin during that same period. Cedar Park has added over 8,200 apartment units since early 2020, translating to a nearly 58% increase. Similarly in Jacksonville, rents were cut 4.1% in the year-ending October, but in the fast-growing St. Augustine submarket, rent cuts reached 6.4% as total inventory in that submarket has grown by over 58% in less than four years.
Meanwhile, in all 16 of these submarkets, more supply is on the way, led by an astounding 11,894 units under construction as of the end of 2024’s 3rd quarter in Phoenix’s Avondale/Goodyear/West Glendale submarket. Avondale/Goodyear/West Glendale will grow total inventory by over 35% in the coming year alone.
