Rebounding Rental Demand and Localized Supply Concentration

This chapter delves into the rising demand for rental properties as affordability improves, focusing on increased supply in select regions like Sunbelt markets, parts of Los Angeles, Seattle, and the East Coast, with Austin, Texas highlighted as an extreme case of apartment overbuilding surpassing absorption capacity.

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Downward pressure on rent prices is causing a “cascade” effect across all unit types. Whether you live in a luxury apartment or budget-friendly multifamily building on a busy street, you’ve probably seen asking rents lowering around you with apartment concession offers in many leasing offices. With multifamily supply hitting “peak completions,” apartment operators have had to tackle rising vacancy rates by lowering rents. But this trend could be reversing soon, just as things were getting more affordable for renters.

Jay Parsons, rental housing economist, spends much of his day searching through rental data to find trends pointing to what could happen next. We’ve brought him on to understand why rents are dropping, where they could be heading, and what happens now that multifamily construction is starting to pause.

Jay speaks on the rebounding rental demand that’s starting to show, why our “oversupply” of multifamily could quickly become a shortage, which apartment classes are seeing significant rent price discounts, and whether or not these problems could spill over into the single-family rental market. Plus, Jay gives his outlook for the next few years on whether or not rent growth will reaccelerate as multifamily construction starts fall significantly.

In This Episode We Cover

A rental demand update and why rent prices are getting more affordable

What’s causing the recent demand rebound in the multifamily rental market?

Why our multifamily “oversupply” could quickly vanish and create a new problem

Growing demand for single-family rentals and why these investors may be in a better position

When rent growth could reaccelerate and supply could shrink once again

One growing risk multifamily investors must be aware of when choosing a market

And So Much More!

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