A Rental Market Glut Means Falling Prices in Wilmington
A big jump in multi-family units has put downward pressure on prices in Wilmington, according to data from RealPage.
Back in January, Jay Parsons, Head of Economics at RealPage, tweeted about the top 20 U.S. metro areas for apartment supply growth in 2023.
- Wilmington was tied with Nashville, TN at the 7th with a 7.0% year-over-year supply growth rate for 2023.
- Huntsville, AL took the top spot with 15.6% growth followed by Sioux Falls, SD (+10.2%), Port St Lucie, FL (+8.9%), Lakeland, FL (+8.4%), and Myrtle Beach (+7.9%).
- Charlotte and Raleigh were just outside the top 10 with 6.4% growth.
The Result. Jay Parson tweeted about rental markets seeing the biggest drops to start in 2024 and surprise, many of the same markets that saw big rental growth in 2023 are seeing Class C rental units (properties typically more than 20 years old and located in less than desirable locations) prices fall in 2024.
- Wilmington rents are down 8.8% year-over-year thanks to an apartment supply that is 4.7% above the national average.
- Raleigh/Durham was ranked as 11th, just like rental market growth, with Class C rents falling 6.3% year-over-year.
Analysis. Jay Parson on Twitter: “When you build “luxury” new apartments in big numbers, the influx of supply puts downward pressure on rents at all price points — even in the lowest-priced Class C rentals. Here’s evidence of that happening right now: There are 12 U.S. markets where Class C rents are falling at least 6% YoY. What is the common denominator? You guessed it: Supply. All 12 have supply expansion rates ABOVE the U.S. average.”
BOTTOM LINE: Never before has such a significant problem been so easy to solve. If you want more affordable housing you build. If you want more expensive housing you don’t. The End.
