Dirt Talk Summer 2023

Can Households Afford Today's Sky-High Rents? As luxury multifamily development has increasingly driven new construction across Atlanta, one of the most frequent questions we field is, "How are renters affording these expensive apart ments?" The best explanation we've found lies in the comparison to the cost of owning a home. As has been the case for decades in gateway cities like New York and San Francisco, the monthly payment for an expensive apartment unit is much more affordable than the cost of ownership. The average difference between rents and mortgage payments. $479 $66 The current average difference between the principal and interest component of a mortgage payment and rent (widest gap in history).

Continued migration to sunbelt markets caused the population to increase across Metro Atlanta, and subsequently apartment rents surged. Market rents ended Q2 2023 at $1,641 per unit, up 31.1% over the past five years . While some submarkets saw rents stabilize in recent quarters, rates continued to climb in the I-20 East suburbs and in Westside Atlanta in particular, increasing 5.2% and 4.5% since the start of 2022, respectively. Home prices have already started to decline, but for the market to return to the historical spread between rents and mortgage payments, home prices would need to fall by more than 25% . That decline would be more than that of home prices during the Great Financial Crisis (19.8%), insulating apartment demand from concerns of competition from the single-family market.

SINCE 2000

RENT VS. MORTGAGE MONTHLY COST

Chart Title

$2,400

As of March 2023,

2

$

,

1

7

9

$2,200

the average monthly mortgage payment is than the average monthly rent payment. $530 higher

30% 29 30 28

$2,000

1

$

$1,800

,

6

4

9

$1,600

Qualifies renters as “cost burdened” by the Department of Housing & Urban Development

$1,400

$1,200

27

$1,000

26

$800

25

$600

2011

24

2017

2012

2021

2015

2013

2018

2016

2019

2014

2001

2010

2022

2023

2007 Rent

2002

2020

2005

2003

2008

2006

2009

2004

2000

22%

Mortgage Payment (P&I Only)

Sources: Cushman & Wakefield Research, FRED, Census, HUD, CoStar

23

RENT TO INCOME RATIO

22

LAND SALES TEAM

21

Current average rent-to-income ratio for U.S. multifamily REITs

20

MATT HAWKINS Managing Director matt.hawkins@cushwake.com 404.853.5204

PIERCE OWINGS Managing Director pierce.owings@cushwake.com 404.853.5350

JESSICA SHERRY Senior Marketing Specialist jessica.sherry@cushwake.com 470.480.5260