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Reno Multifamily Market Report

2nd Quarter 2022

Posted In — Market Research | Market Report

Multifamily performance remained strong in July despite economic deceleration in some other markets. According to Yardi Matrix, the average asking rent nationally increased $19, bringing overall rent to a new all-time high of $1,706.

When compared to Reno-Sparks, asking rents increased by $47, bringing the overall rent to $1,680. Rent growth also increased by 2.88% since Q1 2022 while vacancy remained flat compared to last quarter at 2.66%. The single-family sector continues to grow on par with multifamily as homeownership becomes out of reach for more households.

Average rents increased slightly to 2.88% in Q2 2022 compared to Q1 2022 and up slightly year-over-year to $1,680 in Q2 2022 compared to $1,607 in Q2 2021, a 4.5% increase. Whether or not the Reno-Sparks apartment market will see more concessions will largely depend on the vacancy rate. A recent survey of a few (class A) apartments in downtown Sparks reported vacancies as high as 19%.

With debt markets continuing to spiral out of control, it is already having a punishing effect with local deal volume. A total of 10 multifamily properties traded in the second quarter of 2022 which amounted to $34,663,000 in volume. One key sale was a senior project – Mountain Lake Estates – 131 total units which traded for $22,005,000 (or $168,287 per unit).

Yahoo Finance indicated that the Fed has now moved in four consecutive meetings to increase borrowing costs in America, extending its effort to dampen household and business spending. The goal: to wrangle inflation running at rates unseen since the early 1980’s. Short-term borrowing rates are now between 2.25% and 2.50%, comparable to levels in 2019.

The Reno apartment market will continue to experience heightened demand and deliveries. With 5,158 major apartment projects under construction and 5,450 units in the planning stages, there appears to be no slowdown on the development side. With the eviction moratoriums related to Covid 19 now in the rear-view mirror, the rising prices of fuel and other everyday expenses are beginning to take its toll. Johnson Perkins Griffin commented that “It is likely that vacancy rates will begin to increase once all eviction moratoriums are lifted. Rental rates, which have continued to increase since the last recession, will likely begin to stabilize, and ultimately decrease over the next several quarters.” To that end, we will experience strong headwinds this year due to inflation and the rising interest rate environment.

 
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