2005: The Current State and Future of Rental Housing: Exploring COVID-19's Impact, Demand Surge, and Challenges for Affordable Housing with Jay Parsons

Today, Jason talks about the importance of focusing on rental yields and overall return on investment rather than speculative appreciation. While rental prices have been decelerating, they are still increasing by over 4% annually. Visit https://www.jasonhartman.com/ for property investment information and a free video on how to read a proforma for real estate investment and check out his social media accounts for shorter real estate investing lessons.

Jason welcomes rental housing economist Jay Parsons for part 1 of today's podcast. Jay serves as Senior Vice President, Chief Economist for RealPage, leading the Economist and Industry Principal teams to provide deep insights on market trends and consumer behaviors. He is a frequent author and speaker on topics affecting multifamily apartments and single-family rentals, including rental housing investment and asset management strategy, rental housing policy issues, risk mitigation and property management.

Jay has been cited in The Wall Street Journal, Bloomberg, The Financial Times, The Economist, and The New York Times, and he has appeared on CNBC and BloombergTV. His commentaries have been published by Barron's, the Pension Real Estate Association, the Mortgage Bankers Association, the National Apartment Association, American Banker and GlobeSt.

Jason and Jay discuss the current state and future of rental housing. He highlights the roller coaster nature of the rental market, with a slowdown during the COVID-19 pandemic followed by a surge in demand in 2021. Rent growth has been strong, although it has moderated compared to the previous years. The rental market's performance varies by geography, with some areas experiencing a slowdown while others remain strong.

Jay also discusses the influx of new multi-family inventory in the market, which reached a 50-year high due to strong demand and construction activity. While there may be short-term imbalances between supply and demand, Jay emphasizes the long-term need for more housing supply. He believes that the rental market, including both single-family rentals and multi-family apartments, will continue to experience strong demand due to demographic factors. Millennials and Generation Z are entering the market, and the housing market will benefit from their demand for rental properties.

However, Jay acknowledges the challenge of providing affordable and workforce housing. Most new construction caters to higher-income households, and building affordable housing is easier said than done. The cost of land, labor, and materials, as well as regulatory restrictions, pose significant obstacles to affordable housing development. Nimbyism (Not In My Backyard) attitudes and opposition from neighbors and local governments further complicate the issue. Jay emphasizes the need to bridge the gap between ideals and practical implementation to address the shortage of affordable housing effectively.

Key Takeaways:

Jason's editorial

1:17 Rental rates are going up!

2:41 Watch the video crash course on "How to read a Proforma" on https://www.jasonhartman.com/ and follow me on Instagram and Twitter

4:06 My Europe trip, loosing my luggage and standing up to the corporatocracy!

14:21 Uncertain economic outlook keeps renters where they are, pushing cap rates up

Jay Parson interview

16:11 Welcome Jay Parsons; rental rates are closer to normal

17:41 It's all dependent on geography

20:47 Demographics, household formation age and the demand tailwinds

22:48 Building affordable workforce housing

26:41 So many requirements to build cheap new houses which brings the cost way up

28:00 A little hope from Florida

29:35 Moving up or down the socioeconomic ladder

32:22 The rent to income ratio, tracking apples & oranges

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