The Feverishly Hot Apartment Market with Jay Parsons

Dean Wehrli
Shelly Chen

Dean Wehrli

Shelly Chen

May 13, 2022

Apartment renters are not the only ones fighting hard for their place in the market. Multifamily investors also face fierce competition from other investors in this very competitive space. On the latest New Home Insights podcast, we interviewed Jay Parsons, Vice President at RealPage, to learn more about what is fueling the piping-hot multifamily market. Keep reading below for some of his key highlights.

Featured guest

Jay Parsons, VP, Head of Economics & Industry Principals, RealPage

Taking the temperature on the apartment market

  • The upper income bracket is the fastest growing renter segment, fueled by rising incomes and household formation in affluent niches.
  • Rising for sale housing prices are leading to longer renter retention, especially in the single-family rental market.
  • There are currently 700,000+ apartment units being constructed, the highest level of activity in 40 years.
  • It is highly competitive to buy a stabilized apartment project now. Investors are looking to new development for better yields.

Apartment market risks

  • Some of the biggest threats Jay sees are related to policy (rent control), renter fraud, supply chain, and slowing of income growth.
  • Oversupply is usually a short-term phenomenon associated with demand being met and surpassed temporarily. Diversification in the location of construction activity, especially construction in undersupplied markets, helps mitigate the risk of oversupply.

A near and distant future

  • Demand is returning to city centers—but more from a return of city life than a return to offices.
  • The demand increase in city centers does not come at the cost of suburban demand. Demand is more governed by life stage and preference-based decisions and urban renters want to live in cities.
  • The future is always hard to predict. However, Jay expects there is still room for the apartment market to grow and thrive largely due to favorable demographics over the next 10 to 20 years.

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About The Author

Dean Wehrli
Dean Wehrli
Dean helps housing sector clients figure out not just what might work and what might not, but why.
Shelly Chen
Shelly Chen
Research Analyst II, For-Sale
Shelly is responsible for working on various research projects as it relates to residential for-sale, including supporting our Burns Home Builder Analysis and Forecast report.

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