When rental rates begin to fluctuate, this can be due to a number of reasons. On a high level, the concept of supply and demand seems simple. But the reality is that there are a number of macroeconomic factors within each respective area that can be catalyst for how the multifamily industry is impacted. Understanding these factors will better guide you in recognizing if a market presents opportunity or should be passed over.
The data below is a good example, as you’ll see that there are some surprising trends. Most likely, these fluctuations are being caused by two primary impacts from COVID. First, people are fleeing major market metros to submarkets, where they likely can find more space, at lower prices. Secondly, unemployment further drives this trend as the struggle for families to stabilize their incomes continues. Many are moving to reduce expenses and/or find alternative employment opportunities.
In turn, areas that would not seemingly be likely to attract an influx, or what’s also known as a net migration, are. The migration is what drives rental prices up, as the demand is increasing. In contrast, the markets that tenants are leaving, are reducing rents in an effort to hold onto their occupants as the economic impacts begin to take shape.
As of September 2020, these are the 7 least and most impacted cities by year-over-year asking rents:
Top 7 Cities with Highest Rent Increases:
7. Huntsville, AL
- Annual Change in Effective Asking Rent (Sept. 2019 – Sept. 2020): 6.6%
- Average Rent (1 BR): $821
- Current Unemployment Rate: 6.6%
6. Grand Rapids, MI
- Annual Change in Effective Asking Rent (Sept. 2019 – Sept. 2020): 6.7%
- Average Rent (1 BR): $1,082
- Current Unemployment Rate: 6.2%
5. Mobile, AL
- Annual Change in Effective Asking Rent (Sept. 2019 – Sept. 2020): 6.7%
- Average Rent (1 BR): $813
- Current Unemployment Rate: 9.3%
4. Fresno, CA
- Annual Change in Effective Asking Rent (Sept. 2019 – Sept. 2020): 6.7%
- Average Rent (1 BR): $1,131
- Current Unemployment Rate: 10.4%
3. Stockton, CA
- Annual Change in Effective Asking Rent (Sept. 2019 – Sept. 2020): 7.4%
- Average Rent (1 BR): $1,216
- Current Unemployment Rate: 11.4%
2. Boise, ID
- Annual Change in Effective Asking Rent (Sept. 2019 – Sept. 2020): 8.1%
- Average Rent (1 BR): $1,194
- Current Unemployment Rate: 6.1%
1. Fayetteville, NC
- Annual Change in Effective Asking Rent (Sept. 2019 – Sept. 2020): 8.6%
- Average Rent (1 BR): $828
- Current Unemployment Rate: 9.3%
Top 7 Cities with Highest Rent Decreases:
7. Gainesville, FL
- Annual Change in Effective Asking Rent (Sept. 2019 – Sept. 2020): -1.8%
- Average Rent (1 BR): $1,310
- Current Unemployment Rate: 4.6%
6. Cape Coral, FL
- Annual Change in Effective Asking Rent (Sept. 2019 – Sept. 2020): -2.0%
- Average Rent (1 BR): $1,317
- Current Unemployment Rate: 6.4%
5. Santa Rosa, CA
- Annual Change in Effective Asking Rent (Sept. 2019 – Sept. 2020): -2.0%
- Average Rent (1 BR): $1,942
- Current Unemployment Rate: 7.2%
4. Honolulu, HI
- Annual Change in Effective Asking Rent (Sept. 2019 – Sept. 2020): -2.3%
- Average Rent (1 BR): $1,881
- Current Unemployment Rate: 15.1%
3. Boulder, CO
- Annual Change in Effective Asking Rent (Sept. 2019 – Sept. 2020): -2.5%
- Average Rent (1 BR): $1,953
- Current Unemployment Rate: 5.7%
2. Des Moines, IA
- Annual Change in Effective Asking Rent (Sept. 2019 – Sept. 2020): -3.1%
- Average Rent (1 BR): $955
- Current Unemployment Rate: 4.7%
1. Midland/Odessa, TX
- Annual Change in Effective Asking Rent (Sept. 2019 – Sept. 2020): -31.8%
- Average Rent (1 BR): $1,106
- Current Unemployment Rate: 9.6%
About Ellie Perlman
Ellie Perlman is the founder and CEO of Blue Lake Capital, a woman owned multifamily real estate investment firm focused on partnering with family offices and accredited investors to build and preserve generational wealth. Since its founding in 2017, Blue Lake has successfully acquired and operated multifamily assets across high-growth U.S. markets, completing $1B+ in transactions.
At Blue Lake Capital, Ellie and her team work exclusively with family offices and accredited investors, offering carefully curated investment opportunities that emphasize long-term wealth creation, stability, and risk-adjusted returns. A defining aspect of Blue Lake’s investment strategy is its integration of advanced AI-driven analytics and data science into the entire lifecycle of acquisitions and asset management. By leveraging cutting-edge technology, the firm executes data-driven forecasting on market trends, asset performance, and tenant behavior, ensuring strategic decision-making and optimized returns.
In addition to leading Blue Lake Capital, Ellie is the original founder and host of "REady2Scale - Real Estate Investing" podcast, which provides insights into multifamily real estate, alternative investments, and finance.
Ellie began her career as a commercial real estate attorney, structuring and negotiating complex transactions for one of Israel’s leading development firms. She later transitioned into property management, overseeing over $100M in assets for Israel’s largest energy company.
Ellie holds a Master’s in Law from Bar-Ilan University in Israel and an MBA from MIT Sloan School of Management.
You can learn more about Blue Lake Capital and Ellie Perlman at www.bluelake-capital.com.
*The content provided on this website, including all downloadable resources, is for informational purposes only and should not be interpreted as financial advice. Furthermore, this material does not constitute an offer to sell or a solicitation of an offer to buy any securities.
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