On The Market

195: What Happens to Rent Prices When 1,000,000 New Units Come Online in 2024? w/Chris Salviati

Mar 4, 2024

Rent prices peaked in 2022 but began to fall as vacancies rose. A tidal wave of multifamily inventory is about to come online, forcing investors to compete with luxurious options. Will oversupply affect single-family rentals or push renters towards more affordable options? Chris Salviati shares insights and predictions in this episode.

46:53

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Chris Salviati

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Quick takeaways

Rent prices are expected to decrease due to oversupply of multifamily units in the market.

Divergent rent trends were observed during the pandemic, with coastal cities experiencing declines while mid-sized markets saw increases.

Deep dives

Rental Trend Assumptions and Expert Insights

Investors assumed rents would rise, leading to market saturation. Chris Salviati from Apartment List shared historic rent trends, mentioning a downturn during the pandemic. In 2021, rents soared by 18%, gradually declining in 2022 and 2023. Demand shifts, migration patterns, and new multifamily supply influenced the market, impacting rent growth.

Introduction

5min

Impact of Pandemic on Rent Prices and Migration Trends

4min

Discussion on Pandemic's Impact on Spending Habits and Real Estate Market Analysis

3min

Trends in Luxury vs. Affordable Rentals

14min

Analysis of New Construction Impact on Rental Market

3min

Rent Concessions and Market Softness Analysis

17min

Rent prices peaked in 2022 after a double-digit percentage run-up. Due to more household formation, disposable income, and remote work availability, Americans were doing whatever they could to upgrade their housing to bigger, better, and often more expensive options. But, after interest rates shot up, the economy began to cool, and work-from-home became a not-so-sure thing, Americans became more budget-conscious. As a result, vacancies rose, and rent prices began to fall. So, how close are we to seeing rent growth return?

Apartment List’s senior housing economist, Chris Salviati, joins us to share what his team has seen in the nationwide rent data. Chris looks mostly at large apartment data—the sector that’s been hit the hardest in recent years. With multifamily properties struggling to find renters and lowering their asking prices to prompt demand, you’d think the market had found a bottom—but this isn’t the case.

A tidal wave of multifamily inventory is about to come online, and when it does, multifamily investors will be forced to compete with the newest and most luxurious options on the market. Will this oversupply trickle down to single-family rentals, or will renters turn away from the A-class buildings in search of more affordable options? Chris gives us his thoughts, plus future rent growth predictions, in this episode!

In This Episode We Cover:

What happens to rent prices when 1,000,000 more multifamily units come online

Markets that have the most oversupply and could see significant rent cuts

The massive concessions multifamily apartments are giving new renters

When real estate investors can expect rent growth to pick back up

2024 rent price predictions and whether demand could come back

How single-family rental prices will be affected by multifamily’s huge oversupply

And So Much More!

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