On The Market

228: Demand for Rentals is Rebounding as Affordability Begins to Improve w/Jay Parsons

Jun 24, 2024

Real estate market analyst Jay Parsons discusses the rebounding rental demand and dropping rents, analyzing the shift from oversupply to potential shortage, the impact on different apartment classes, and the outlook for rent growth as multifamily construction slows down.

40:09

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Jay Parsons

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Quick takeaways

Rental demand is rebounding, potentially leading to shortages in the multifamily market.

Oversupply is causing rent cuts across various property classes, with future growth acceleration anticipated.

Deep dives

Overview of Rental Inventory in the Housing Market

Exploring the mismatch between the inventory renters need and what is actually available, investors are questioned about filling market gaps. Insights from Jay Parsons focus on multifamily supply trends post-pandemic, examining the impact of shifting demand. The discussion delves into the history of rental demand from pre-pandemic stability to the subsequent rebound and challenges faced. The dynamic nature of rental market demand and supply fluctuations are highlighted.

Intro

2min

Rental Demand Dynamics: Pre-Pandemic, Pandemic, and Post-Pandemic

6min

Rebounding Rental Demand and Localized Supply Concentration

3min

Trends in the Real Estate Rental Market

14min

Rental Demand Rising Due to Home Affordability Concerns

6min

Housing Market Dynamics and Future Outlook

9min

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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