Oct 12, 2022 - Economy

Apartment demand is cratering

Data: RealPage Market Analysis; Note: Negative demand means more renters moved out than moved in; Chart: Axios Visuals
Data: RealPage Market Analysis; Note: Negative demand means more renters moved out than moved in; Chart: Axios Visuals

The rental market is chilling out after an explosive run last year.

Why it matters: Soaring rent prices have been a major driver of inflation. This could be a sign that those price pressures are starting to ease — but it could take time before the consumer price index numbers reflect the shift.

State of play: Demand for new leases took a surprising tumble in the third quarter, according to data from RealPage. It's the first time in 30 years that the firm has seen negative demand for new apartments in Q3, traditionally a strong season.

  • "Negative demand" means more folks moved out of apartments than moved in.
  • Add this chart to some other signs that rents have peaked, as Axios wrote last month.

What's happening: The slowdown isn't necessarily about affordability but is more to do with how folks are feeling about the economy, according to RealPage's analysis.

  • Negative demand is a sign of a slowdown in new household formation — people holding off on moving out of their current situation, in other words.
  • “Inflation and economic uncertainty are having a freezing effect on major housing decisions," Jay Parsons, head of economics and industry principals for RealPage, said in a report out last week. "When people are uncertain, human nature is to go into 'wait and see' mode."

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