The multifamily real estate market in New London County continues to show strong momentum, with consistent rent growth and high demand. Since 2020, the market has seen significant appreciation, driven by a combination of tight supply, increasing demand, and limited new construction. As we look forward, the data points to continued strength in the multifamily sector, making it a prime area of opportunity for investors and property owners alike.
Let’s dive deeper into the numbers and trends shaping this market.
Steady Rent Growth Since 2020
One of the most notable trends in New London County’s multifamily market has been the steady increase in rent prices. Back in 2020 Q1, the average rent per unit was around $1,293. Fast forward to 2024 Q4, and that number is projected to rise to $1,690, reflecting a significant 30.7% increase in just under five years. This averages out to an impressive 5.2% annual growth rate.
Looking ahead, the market shows no signs of slowing down. Projections suggest that by 2029 Q4, the average rent per unit could reach $2,067, driven by continued high demand and limited new supply. For property investors, this presents a valuable opportunity to capitalize on rising rents and strong returns.
High Occupancy Rates: A Sign of Strong Demand
Occupancy rates in New London County have remained consistently high over the past several years, typically hovering around 95% to 97%. As of 2024 Q2, the occupancy rate stood at 97.4%, highlighting the strong demand for multifamily housing in the region.
This high occupancy rate suggests that there is a tight rental market, with relatively few available units for renters. It also indicates that tenants are renewing leases and staying longer, driven by the lack of alternatives in an undersupplied market. With vacancy rates at such low levels, it’s clear that the demand for rental units far exceeds supply, creating favorable conditions for landlords.
Minimal Concessions: A Landlord’s Market
Another key indicator of market strength is the low level of concessions offered by landlords. Concessions, such as rent discounts or waived fees, are often used in weaker markets to attract tenants. However, in New London County, the average concession rate is less than 0.5%. This tells us that landlords are not needing to offer incentives to fill their properties, further illustrating the competitive nature of the market.
For renters, this means less room for negotiation, but for landlords and investors, it signals strong pricing power.
Limited Supply and New Construction
The number of multifamily units in New London County has increased only marginally over the past few years, with 19,544 units available as of 2024 Q4. While this is up slightly from 17,762 units in 2020 Q1, the pace of new construction has been relatively slow. This limited supply has put upward pressure on rents, as demand continues to outstrip available housing.
As a result, property owners are benefiting from high demand and rising rents, while renters are facing increased competition for a limited number of units. This trend of slow supply growth is expected to continue, which could keep upward pressure on rents in the coming years.
Inflation-Adjusted Growth
Even when adjusting for inflation, rent growth in New London County has been impressive. Inflation-adjusted data shows rents rising from $1,293 in 2020 Q1 to a projected $1,690 by 2024 Q4. This demonstrates the underlying strength of the market, as rents have continued to climb even in the face of broader economic pressures like inflation.
What’s Next for New London County?
The multifamily market in New London County is poised for continued growth. With rents projected to rise to $2,067 per unit by 2029, and occupancy rates remaining high, it’s clear that demand for multifamily housing will remain strong.
For investors, this presents a compelling opportunity to enter a market with solid returns and consistent growth. With limited new supply and increasing demand, the market dynamics are heavily in favor of property owners and investors looking to capitalize on rising rents and a tight rental market.
On the other hand, renters may continue to face challenges as competition for available units remains high, and rental prices climb. The lack of new construction means that supply constraints will persist, potentially driving rents higher and limiting affordable housing options.
Posted by Tim Bray on
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