On The Market

Rental Demand Could “Catch Up” in These Oversupplied, Struggling Markets

Oct 14, 2024

Austin Wolff, a Market Intelligence Analyst at BiggerPockets, dives into the curious duality of the U.S. housing market—shortages in some areas versus oversupply in places like Austin and Fort Myers. He discusses how these dynamics lead to falling rents in certain cities while the Midwest thrives. Austin also examines the potential for oversupplied markets to rebound as construction slows. Additionally, he shares insights from his own investment journey in Fayetteville, highlighting local demand trends and the surprising relationship between supply and rental prices.

37:55

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Episode guests

Austin Wolff

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Quick takeaways

The United States is grappling with a significant housing shortage of three to seven million units, impacting both investors and homebuyers.

In oversupplied markets like Austin and Fort Myers, increased housing availability is leading to declining rents, creating challenges for landlords.

Deep dives

Current Housing Supply Shortage

The United States is currently facing a significant shortage of housing units, estimated to be between three and seven million. This shortage presents challenges for both investors and prospective homebuyers, as the limited supply constrains market options. While there has been a slow increase in housing supply, with an average growth rate of around 4% per metropolitan area annually, demand still exceeds the current availability. The ongoing housing deficit can be traced back to the aftermath of the Great Recession, when many builders exited the market, leading to years of underbuilding that has not yet been fully addressed.

Intro

2min

Navigating Housing Markets: Insights from a New Analyst

8min

Sponsor Spotlight: Partnering for Investment Success

2min

Housing Supply Dynamics and Rent Trends

14min

Supply, Demand, and Rental Dynamics

7min

Market Predictions and Research Resources

4min

America is experiencing a strange housing supply problem. On one hand, we don’t have enough housing supply nationally; on the other, we have too much housing supply in cities like Austin and Fort Myers, and as a result, these cities are seeing significant rent declines. Meanwhile, rents are still going strong in much of the Midwest, as their supply-constrained markets give landlords and real estate investors the upper hand. But, even in the “oversupplied” markets, is there a chance for rent price redemption in the future?

We brought on BiggerPockets’ own Market Intelligence Analyst, Austin Wolff, to share his latest findings on housing supply. Austin talks about why rents are growing in some parts of the US but declining in more oversupplied markets. But with the slowing down of construction, will these oversupplied markets become undersupplied? Will landlords in these markets be happy they held onto their properties in a few years?

Austin also shares the exact market he’s making his first real estate investment, which boasts high demand but has yet to see a significant supply bump for his asset class. Does higher supply always mean lower rents? Not quite, and we’ll get into why in this episode!

In This Episode We Cover

The state of our 2024 housing shortage problem and why we may be under and oversupplied

Where rent prices are falling and the cities with the most supply coming online

When demand could finally “catch up” to the high supply these markets are experiencing

The correlation between supply and rent prices (and why they aren’t ALWAYS opposite)

Long-term rent projections as building starts to slow and demand stays high

And So Much More!

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