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

On The Market

BiggerPockets

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4.8 • 820 Ratings

🗓️ 4 March 2024

⏱️ 45 minutes

🔗️ Recording | iTunes | RSS

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Summary

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! Links from the Show Find an Agent Find a Lender BiggerPockets Forums BiggerPockets Agent BiggerPockets Bootcamps Join BiggerPockets for FREE On The Market Join the Future of Real Estate Investing with Fundrise Connect with Other Investors in the “On The Market” Forums Subscribe to The “On The Market” YouTube Channel Dave's BiggerPockets Profile Dave's Instagram James' BiggerPockets Profile James' Instagram Chris' Articles and Reports Chris' LinkedIn Chris' X/Twitter BiggerPockets' Instagram Rents Show Biggest Decline in 3 Years—Should Landlords Panic? Multifamily Is at High Risk of Continuing Its Historic Crash in 2024—Here’s Why 2024 Rental Market Outlook: Is a Shift Coming? Check out more resources from this show on https://www.biggerpockets.com/blog/on-the-market-195 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [email protected]. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	Hey, everyone, welcome to On the Market. I'm your host, Dave Meyer, joined today by James Dainerd.
0:13.4	James, are you ready to talk about rent trends? We haven't talked about this in a while.
0:18.5	No, we've heard about everything else, the doom and gloom.
0:21.2	And now we're starting to hear more of that.
0:22.6	Where's the runway on this multifamily going forward?
0:25.6	Yeah, it's a really important topic because at least what I was seeing for a long time is that
0:32.0	investors were jumping into the market with the assumption that rents were going to go up.
0:36.3	And even if things didn't pencil in year one, they might pencil sometime in the future. And today,
0:42.4	we're going to examine if those are safe assumptions to be making in today's day and age.
0:48.9	So we are bringing on an expert. We have Chris Salviati from Apartment List. He's their senior economist.
0:56.6	And he's going to teach us a little bit about rent. He'll first start with historic trends and
1:03.5	context. So we all are on the same page about what happened with rents during the pandemic.
1:08.7	Then we're going to shift gears and talk a little bit about what's
1:12.0	happening with rents today and how different sectors of real estate are performing differently.
1:17.5	So, you know, residential might be different than multifamily. One market might be different than
1:22.2	another. And lastly, Chris is actually going to give us a prediction on where rent is going to go throughout
1:29.1	2024. And one thing I'm super excited to talk to Chris about is the saturation of the multifamily
1:35.6	market because we're seeing a huge boom in multifamily supply and that is going to cascade
1:41.6	throughout the industry. So this is a great episode if you're in multifamily, if you're a residential, if you're
1:47.9	trying to buy a property, because this type of data, this type of information really helps
1:53.9	fuel your underwriting.
1:55.8	Like if you're going out there to analyze a deal, this is the kind of information you
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