Austin and Miami tumble down the apartment rankings

We expect apartment markets to perform poorly over the next two years, with all our 17 metros seeing capital values lower at the end of 2025 than they are now. However, there will be substantial differentiation. At the top end, we think Houston apartment values will be down by just 2%, whereas those in Seattle could end up another 25% lower. Divergence in performance within our forecasts is driven by differing prospects for NOIs. For example, we think vacancy will climb by over 300bps in 2024-25 in four markets – Austin, D.C., Miami and Seattle – whereas we expect it to fall in Boston, Chicago, Houston and Phoenix. And off the back of that, we see rents falling in the first four metros by end-2025, but rising by around 4% in the latter four. Even with recovery in 2026-28 as new supply drops back, we still expect most markets to see net falls in capital values over the five-year forecast. (See Chart 1.) Houston stands out (positively) in terms of capital growth, although for total returns, it is matched by Boston and Chicago, with Atlanta close behind.