For the first time since before the pandemic, apartment dwellers in Atlanta are facing lower asking rents on average than the year before.
Atlanta multifamily owners dropped average asking rents 2.3% in March compared to 2022, to $2,055 per month, according to Redfin. Atlanta was among the 10 cities in the nation with the sharpest rental rate declines in March, led by an 11% drop in Austin, Texas, a 9.2% drop in Chicago and a 3% fall in New Orleans.
But some of Atlanta’s most competitive economic development rivals saw continued rent growth, including a 16.6% increase in Raleigh, North Carolina — the biggest rent growth market in March in the U.S. — a 13% jump in rents in Charlotte and a 9.6% increase in rents in Nashville, Tennessee. Nationally, asking rents fell across the nation by 0.4% to $1,937 in March, the first decline since March 2020, according to Redfin.
A maelstrom of trends is finally impacting what appeared to be untouchable apartment fundamentals, with slower demand from high-income households, continued strong construction, rising vacancies and accelerating rates of cost-burdened households, according to a recent report from the Joint Center for Housing Studies at Harvard University.
Much of what is being developed and unleashed into the U.S. rental market is on the higher end, while more affordable apartment units are facing a supply crunch, according to Harvard.
Those dynamics are impacting rents inside the Interstate 285 perimeter, where developers have delivered 4,700 units over the past 12 months and are underway with 12,736 with another 9,600 units planned, according to Haddow & Co. research.
“I think that the new construction starts probably have a lot to do with it,” United Brokers America President Maria King said in reaction to the Redfin report. “People are just going to the newer, bigger, better [property] instead of staying where they are, which is why I think a lot of existing properties are going to have to look to ways to compete.”
Apartment occupancy fell from 94.5% by the end of 2021 to 92.7% by the end of last year. But rising mortgage rates have helped to keep households in the rental market, according to a recent Cushman & Wakefield report.
But rising concessions by landlords to lure in renters, like a month or so of free rent, is masking a weaker apartment market in Atlanta, especially with Midtown and Buckhead landlords, Promove Director Oleg Konstantinovsky told The Atlanta Journal-Constitution this week.
“It’s simple economics," he said. "When occupancy goes down, prices have to fall."
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