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

On The Market

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4.8 • 820 Ratings

🗓️ 24 June 2024

⏱️ 39 minutes

🔗️ Recording | iTunes | RSS

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Summary

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! 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 Property Manager Finder See Dave at BPCON2024 in Cancun! Rent Prices Are “Guaranteed” to Increase Over the Next Two Years—Here’s Why Connect with Jay: Follow Jay on LinkedIn Jump to topic: (00:00) Intro (01:38) Rental Demand Rebounding? (05:03) We're at "Peak Completions" (07:52) What's Being Built? (12:14) Rent Cuts For All (18:09) Single-Family Rental Supply Shrinks (21:04) Wage Growth Outpaces Rents (23:12) Is It Better to Rent? (26:19) Supply and Rent Predictions (30:33) Big Regulatory Risks Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/on-the-market-228 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	On today's show, we're digging into a pretty big can of worms in the housing market,
0:05.3	which is all about rental inventory.
0:07.9	The question is, what inventory do renters need and want versus what is actually available right now?
0:14.7	And can investors take the data available to them to try and fill a gap in the market or at least recognize
0:22.7	when pursuing multifamily or certain types of asset classes, does it make sense in today's
0:28.7	market?
0:34.3	Hey, everyone and welcome to On the Market. I'm your host, Dave Meyer. And today we are bringing on
0:40.0	in my world what you would consider a superstar. I understand that most people may not think
0:44.7	of economists as celebrities. But for me, Jay Parsons, who's our guest today, is a very big name.
0:52.3	And I'm super excited to have him on the show.
0:55.2	Jay has spent his entire career focusing on multifamily and rental housing economics,
1:00.4	so we really couldn't get a better guest to cover this topic.
1:03.8	And in today's episode, we're going to talk about multifamily supply from the pandemic
1:08.0	and how it's impacting today's market.
1:10.7	We'll talk about what supply we have coming online in conjunction with how demand has shifted
1:15.5	and if those things are moving in the same direction.
1:19.0	Jay and I are also going to talk about whether there's a mismatch problem.
1:22.9	And lastly, we'll also look to the future and talk about what to expect in the coming years in terms of multifamily demand, rent growth, and profits.
1:32.3	All right, let's bring on Jay.
1:38.5	Jay, welcome to On the Market.
1:40.5	Thanks for joining us today.
1:42.1	Thanks for having me, Dave.
	...

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