Markerr’s machine-learning rent forecast predicts 2023 rent growth to still be above the historical average. However, this figure is far cry from last year when U.S. rents saw an increase of 7.3%.

Key Takeaways:

• The 4.2% YoY rent growth forecast is higher than the 3.8% average over the past ten years, but lower than the exorbitant rent growth in recent years. 
• Sunbelt Markets, led by Austin, TX, are forecasted to have the highest rent growth in ’23 when compared to other geographical areas. Tertiary markets, Coastal markets, and Rustbelt markets are projected to follow Sunbelt markets in ’23.
• Ranking first out of the top 100 markets, Austin’s largest contributors to rent growth are single family permits, population, median gross income, home prices and past rent growth. Forecasted lowest in the  rankings, Sacramento’s gloomy rent forecast figure is driven by home prices, rent, job growth, single family permits and population.

The 2023 outlook from Markerr shows that U.S. rent will see a 4.2% increase. This figure is slightly below half of the rent growth we saw in 2022. Looking by geographic areas shows Sunbelt and Tertiary markets to outperform the national average of 4.2% by 30 to 40 bps.

Markerr’s markets with the highest forecasted rent growth are names akin to the markets which also saw astronomical growth during the pandemic. Austin, TX is forecasted to have the highest rent growth. On the other hand, Sacramento, CA is forecasted to have the lowest rent growth through 2023.

As a reminder, Markerr’s rent forecast leverages a machine-learning approach that allows the model to learn about hidden relationships within components that impacts rent growth. Ranking first out of the top 100 markets, Austin’s largest contributors to rent growth are single family permits, population, median gross income, home prices and past rent growth. Forecasted lowest in the  rankings, Sacramento’s gloomy rent forecast figure is driven by home prices, rent, job growth, single family permits and population.