Apartment List reported its National Rent report covering November and its index fell by 1% m/o/m, “marking the 3rd straight m/o/m decline, and the largest single month dip in the history of our index, going back to 2017. The timing of the recent cooldown in the rental market is consistent with the typical seasonal trend, but its magnitude has been notably sharper than what we’ve seen in the past, suggesting that the recent swings to falling rents is reflective of a broader shift in market conditions beyond seasonality alone. Going forward it is likely that rents will continue to dip further in the coming months as we move through the winter slow season for the rental market.”
Year to date rent growth is 4.7%, closer to the pace seen in 2018 and 2019 and well off the red hot pace of 18% last year. The vacancy rate also is picking up to 5.7% after bottoming at 4.1% one year ago. “Today’s vacancy rate still remains below the pre-pandemic norm, but could get back to that benchmark as early as next spring, if the current rate of easing continues.”
Bottom line, seeing inflation roll over and the soon to be peak in Fed rate hikes was the first mountain to climb for both the economy and markets in 2022. The next mountain needing to be conquered, and will be the 2023 focus I believe, is the economic consequences to such a sharp rise in interest rates, the higher cost of capital that both businesses and households have to deal with and the recession it creates.
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor. Each day The Boock Report provides summaries and commentary on the macro data and news that matter, with analysis of what it all means and how it fits together.