Renters in the Sun Belt may soon see some relief as investors flee the market amid an oversupply of apartments. The number of apartments under construction in major cities in the Sun Belt — from Atlanta to Austin — is expected to exceed the number of tenants expected to occupy them, and that is pushing rent growth down, according to new data from CoStar Group
Investors who are seeing rent growth fall are consequently shifting their money into Midwestern markets, the company added, where they are still finding slow but steady growth. After a months-long surge, rents are finally cooling off — particularly in the Sun Belt, as a result of supply hitting the market. Before and during the pandemic, the Sun Belt led the nation in rents. The average annual rent growth in 2018 for the region was 3.3%, as compared to just 2.4% in the Midwest, CoStar data showed. During the pandemic and in the second quarter of 2021, rent growth in the Sun Belt surged to 16.1%, according to CoStar, as millions of Americans moved to the south. Many people were able to work from anywhere due to the coronavirus pandemic shuttering offices. Maricopa County in Arizona and Collin County in Texas were the two counties in the region that saw the highest level of net domestic migration, according to the U.S. Census Bureau, in 2022. Homebuilders and developers piled into the Sun Belt hoping to match the flow of people moving to the state. Looking at building permits through November 2022 and comparing it to the year before, the National Association of Home Builders found that home builders were most active in the south.
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