1. Two pieces of evidence that the apartment market will soften in 2023 are the large number of new apartment units expected to be completed (nearly 450,000 new units) and slowing migration and household formation. 2. After the introduction of COVID vaccines in late 2020, apartment rents increased rapidly over the next two years as demand surged. However, rents have recently started to decline in some cities as tenants feel they can no longer afford large rent increases. 3. Rents may decline in 2023 as the large supply of new apartment units is expected to outpace demand, which is slowing as economic growth softens.

1. Apartment article
read article and answer the following questions in essay form.
According to the article, what are 2 pieces of evidence or expectations that suggest that the
apartment property market will soften in 2023?
2. What happened with apartment rents after the introduction of COVID-19 vaccines in late
2020? Describe why rents changed as they did.
3. Why might apartment rents decline in 2023?
4. In what type of buildings are apartment rents expected to be most likely to decline?
Why?
5. What is one reason that could increase one’s optimism about the apartment rental market
in 2023?
6. Why are higher interest rates relevant for apartment owners who want to be able to
increase rent?
1/10/23, 5:30 PMApartment Rent Growth Set to Keep Slowing This Year -
WSJhttps://www.wsj.com/articles/apartment-rent-increases-slow-a-relief-to-tenants-
after-two-years-of-steep-rises-116727014141/6This copy is for your personal, non-
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contact Dow Jones Reprints at 1 800 843 0008 or visit
www.djreprints.com.https://www.wsj.com/articles/apartment-rent-increases-slow-a-
relief-to-tenants-after-two-years-of-steep-rises-11672701414REAL ESTATEPROPERTY
REPORTApartment Rent Growth Set to Keep SlowingThis YearTenants maxed out on rental
spending combined with new apartment supply areexpected to moderate increasesThe
West River apartment complex in Tampa, Fla. A slowdown in rental price increases would
bring relief to manytenants whose wages aren’t keeping pace with rents.PHOTO: OCTAVIO
JONES FOR THE WALL STREET JOURNALBy Will ParkerFollowJan. 3, 2023 8 00 am ETThe
pandemic-fueled boom for multifamily building owners is fading fast going into
2023. Apartment vacancies are piling up. The biggest wave of new rental buildings in nearly

2. fourdecades is expected to cut the pace of rent growth across the country. Some in-
demandSunbelt cities are already experiencing rent declines, in part because many tenants
andpeople searching for apartments feel they can’t devote any more of their income to
rent.Rising interest rates, meanwhile, make rental-property investments less profitable
than oneyear ago when debt was cheap and hefty rent increases were taken for
granted.“We’re necessarily going to get a bit of a pullback,” said Thomas LaSalvia, senior
economist atMoody’s Analytics.
1/10/23, 5:30 PMApartment Rent Growth Set to Keep Slowing This Year -
WSJhttps://www.wsj.com/articles/apartment-rent-increases-slow-a-relief-to-tenants-
after-two-years-of-steep-rises-116727014142/6Lower rent growth would help curb
general inflation while bringing relief to many tenantswhose wages already weren’t keeping
pace with rents. Of the 44 million households that rent,more than 19 million spent 30% or
more of their income on rent and other housing costs,according to a December report from
the U.S. Census Bureau that estimated spending from2017 to 2021. Completed new
construction apartments,annuallySource: CoStarNote: 2022 and 2023 igures are forecasts
1/10/23, 5:30 PMApartment Rent Growth Set to Keep Slowing This Year -
WSJhttps://www.wsj.com/articles/apartment-rent-increases-slow-a-relief-to-tenants-
after-two-years-of-steep-rises-116727014143/6The reversal comes after an
unprecedented run for the apartment and home rental industrythat most housing
economists say was shaped by the pandemic. Early lockdowns createdpent-up demand for
housing that later exploded in the months after the introduction ofCovid-19 vaccines in late
2020. Many young people went out to rent their first home, and thesudden increase in
people searching for apartments helped rents climb 25% over two years. In particular, well-
paid workers from the Northeast decamped for growing cities in theSunbelt, where they
could work remotely and where their higher incomes commanded morespace.Now, many of
those same places that shot up in price are seeing slides in demand and rentsare going
down. Between April and October of 2022, rents fell 3% in Las Vegas, 2% in Phoenixand 1%
in Tampa, according to Apartment List. All three of those cities saw rents rise morethan
30% during the preceding two years. If migration and new household formation continue to
slow, analysts said some markets couldsee a full 12 months of negative rent growth starting
sometime this year. Meanwhile, nearly half a million new apartment units—the most of any
year since 1986—areexpected to complete construction by the end of 2023. That will come
after more than400,000 units were completed during 2022, according to an analysis by
property data firmCoStar Group Inc. The addition of so many new apartments to slowing
housing markets isexpected to help keep a lid on rent growth.
1/10/23, 5:30 PMApartment Rent Growth Set to Keep Slowing This Year -
WSJhttps://www.wsj.com/articles/apartment-rent-increases-slow-a-relief-to-tenants-
after-two-years-of-steep-rises-116727014144/6National apartment rents, monthlySource:
Apartment List median rent estimates
1/10/23, 5:30 PMApartment Rent Growth Set to Keep Slowing This Year -
WSJhttps://www.wsj.com/articles/apartment-rent-increases-slow-a-relief-to-tenants-
after-two-years-of-steep-rises-116727014145/6Some cities with higher than average
construction activity could even see full year rentdeclines, said Jeff Adler, vice president in

3. the data division of property technology companyYardi Systems Inc. He cited Miami, Austin,
Texas, and Raleigh, N.C., as places with anespecially large amount of new supply expected to
open this year.The coming increase in new apartments is most likely to affect rents at
higher-end buildings,because there might not be enough people who make enough money
to rent them, accordingto CoStar.“The potential demand for newly developed [high-end]
properties remains dependent on anexpanding pool of high income renter households
only,” CoStar said.Amid rising concerns of a recession, many housing economists don’t think
job and wagegrowth will be strong enough to sustain much in the way of rent increases this
year. BothYardi and Moody’s expect rents to rise about 3% nationally during the next 12
months, lessthan half the rate seen in 2022.“When you look at real wages, you saw that they
were pretty darn stagnant for the last year ortwo years,” Mr. LaSalvia said. Some tailwinds
remain for the rental sector, however. Higher mortgage interest rates andhigh home-sales
prices mean fewer people can buy their first home, bolstering demand forrental houses and
apartments. Despite the expected increase in new rental buildings, mostanalysts think the
majority of cities will remain undersupplied with the kind of affordableunits that see the
highest demand. Such factors should help keep vacancies from rising toomuch and keep
rents from going negative in most cities, analysts said. If there is a recession, history shows
that the rental sector handles bear markets better thanother parts of the economy, where
consumers are more likely to cut back their spending. “Rent eats first,” Mr. LaSalvia
said.Even so, investors are adjusting their expectations to the more challenging
environment. “In 2021 and into early 2022 you could raise rents significantly without doing
a lot to theproperty itself,” said Karlin Conklin, principal of apartment landlord Investors
ManagementGroup, which owns buildings in the Sunbelt and on the West Coast. “We don’t
see thathappening going forward.”
1/10/23, 5:30 PMApartment Rent Growth Set to Keep Slowing This Year -
WSJhttps://www.wsj.com/articles/apartment-rent-increases-slow-a-relief-to-tenants-
after-two-years-of-steep-rises-116727014146/6Appeared in the January 4, 2023, print
edition as 'Apartment Rents’ Growth Slows Down'.Borrowing the money to make
investments in existing rental properties, such as renovatingthem to be more attractive to
higher-paying tenants, has become more expensive because ofrising interest rates. Sales of
apartment buildings are falling as a result. Building sales inNovember, as measured by total
dollar value, were 74% below their levels during the samemonth the previous year,
according to a report from MSCI Real Assets. “The incentives for apartment investing have
changed,” the report noted.Write to Will Parker at will.parker@wsj.com