How to Analyze Rental Markets

This chart is critical to understanding America's renters today. Rental affordability is increasingly a story of "haves" and have nots." It aligns with the K-shaped economic story we hear often hear about. The "haves" are (generally) those making >$50k/year. They spend somewhere around 20% of income on rent. They tend to live in professionally managed, market-rate Class A/B apartments. They tend to pay the rent every month. The "have nots" are (generally) those making <$50k/year, and especially those under $30k (as the Harvard Joint Center for Housing Studies shows on this chart from their newly released report on rental housing). Many of them spend more than half their income on rent, which is painful math that comes with hard decisions each month. This group is far less likely to live in professionally managed, market-rate apartments. And if they do, they're at the lowest end of the market -- older, Class C units. Many rely on subsidized affordable housing and/or vouchers, if they can get it. Interestingly: Renter demand is overwhelmingly dominated by the "haves." Harvard's report shows nearly all new renter demand over the last 5 years (and also the last 10 years) has come from households making ABOVE $75,000 per year, and Harvard shows us those renters spend less than 20% of their income on rent -- which is very low by any definition. This aligns with CoStar data showing apartment absorption overwhelmingly shifting UP market to newer, pricier units. Implications: There are two renter markets today. And two things are true: 1) There is a severe shortage of subsidized affordable housing for lower-income renters spending a high share of income on rent. 2) There has been massive demand for Class A/B market-rate rental housing among higher-income renters spending a low share of income on rent. So for investors and developers and policymakers, it's absolutely critical to acknowledge that both statements are true. We like to paint in broad brushes, so we're often told things like "Renters can't afford the rent," as if that's universally true. But it's not -- and that narrative is a disservice to those families struggling to get by. We need to narrow to focus to the actual challenges (i.e. a lack of quality affordable housing and the deteriorating conditions of aging, naturally occurring affordable housing -- another factor Harvard points out). #renters #rentalhousing

One of the most fascinating trends in the market right now is not only how impactful lease-up properties have been relative to each other, but also how impactful lease-ups have been on existing product. So much so in fact that effective lease-up rents have actually dipped 𝐛𝐞𝐥𝐨𝐰 effective rents among existing Class A properties too. And here's something perhaps even more interesting: 𝘦𝘷𝘦𝘯 𝘭𝘦𝘢𝘴𝘦-𝘶𝘱 𝘢𝘴𝘬𝘪𝘯𝘨 𝘳𝘦𝘯𝘵𝘴 𝘩𝘢𝘷𝘦 𝘥𝘪𝘱𝘱𝘦𝘥 𝘣𝘦𝘭𝘰𝘸 𝘴𝘵𝘢𝘣𝘪𝘭𝘪𝘻𝘦𝘥 𝘊𝘭𝘢𝘴𝘴 𝘈 𝘳𝘦𝘯𝘵𝘴. This is one of the best examples I can think of that highlights how supply does (perhaps paradoxically) lend a direct hand to affordability. Prior to today's big supply wave, lease-up effective rents and stabilized Class A rents were generally pretty close to one another. That was achieved via concessions whereby the typical lease-up was offering a month or so free. In 2019 for example, lease-up asking rents were $2,000 a month and effective rents were $1,870 a month. The math works out to an average concession of about 6.5% (so largely one month free with a handful of properties closer to stabilization that may have pulled back a bit lower than that level). But this chart shows that at the end of 2022 (not coincidentally the starting point of today's big runup in new deliveries), lease-up effective rents began to dip below that of stabilized Class A. And the gap has only widened in the past few months. Today, the average lease-up effective rent is now nearly $300 less per month than stabilized Class A - a hefty 12% discount. That's partially achieved via concessions. More and more lease-ups today are offering more than a month free. But it's also because the asking rent among these lease-up assets has pulled back too. Austin and Tampa are maybe the best examples of where lease-ups are deeply discounted compared to existing Class A. In those markets, 𝒕𝒉𝒆 𝒂𝒗𝒆𝒓𝒂𝒈𝒆 𝒍𝒆𝒂𝒔𝒆-𝒖𝒑'𝒔 𝒆𝒇𝒇𝒆𝒄𝒕𝒊𝒗𝒆 𝒓𝒆𝒏𝒕 𝒊𝒔 20% 𝒃𝒆𝒍𝒐𝒘 𝒕𝒉𝒆 𝒆𝒙𝒊𝒔𝒕𝒊𝒏𝒈 𝑪𝒍𝒂𝒔𝒔 𝑨 𝒎𝒂𝒓𝒌𝒆𝒕. It doesn't take a lot of critical thinking to see how supply is impacting local market trends. You can even find a handful of markets 𝘸𝘩𝘦𝘳𝘦 𝘦𝘧𝘧𝘦𝘤𝘵𝘪𝘷𝘦 𝘭𝘦𝘢𝘴𝘦-𝘶𝘱 𝘳𝘦𝘯𝘵𝘴 𝘢𝘳𝘦 𝘸𝘪𝘵𝘩𝘪𝘯 𝘴𝘵𝘳𝘪𝘬𝘪𝘯𝘨 𝘥𝘪𝘴𝘵𝘢𝘯𝘤𝘦 𝘰𝘧 𝘴𝘵𝘢𝘣𝘪𝘭𝘪𝘻𝘦𝘥 𝘊𝘭𝘢𝘴𝘴 𝘉 𝘳𝘦𝘯𝘵𝘴. Many of the markets that fit this profile are high supply southeastern U.S. markets (Orlando, Lakeland, Cape Coral/Ft. Myers, Myrtle Beach, Asheville, etc.) But also, some coastal and coastal-like markets where concession burnoff factors into short-term asset management strategies (e.g. San Francisco, Oakland, Denver, and Boston for the time being) where Class B rents are ≤10% of lease-ups.

The new StreetEasy Market Report shows the detrimental effects of extremely low vacancy rates in New York City as renters increasingly defer their next move amid the affordability crisis. Considering soaring rents and upfront costs, New Yorkers earning the city’s average annual wage could afford less than 5% of rentals on the market in 2023. 📉 As renters stay put, demand is slowing. The citywide median asking rent remained at $3,800 between May and June, even though rents tend to rise in the summer as New Yorkers look for new homes before their leases lapse. 🌡 Meanwhile, few vacancies in the city’s rental buildings are keeping a ceiling on rental inventory, balancing the softer demand. Despite the gradual inventory growth, those looking to move have limited options with 20.4% fewer rentals on the market this year compared to 2019. 📈 As a result, asking rents won’t decline anytime soon in NYC. The median rent in June was still up 1.3% from a year ago although this growth rate is much slower than double-digit increases last year. 🏗 Is there any solution? Building more homes can make a difference. New developments are driving rental inventory growth in NYC with the Bronx leading the city in both affordable and market-rate rental supply. There were 1,031 market-rate rentals in the Bronx in June, a 15.5% jump from a year ago, with a median asking rent of $2,825. 🔑 Targeted rezonings in the past led to a surge of new rentals joining the market in neighborhoods such as Mott Haven and Greenpoint, expanding options for all renters. Reducing redtapes and maintaining tax incentives will greatly improve the effectiveness of a new zoning plan. #realestate #rental #housing #affordability

The new 2025 Cost of Living Index reveals one of the sharpest affordability divides in recent years, and it’s quietly reshaping the entire U.S. housing landscape. Tupelo, MS, now sits at 79, meaning costs are 21% below the national average. Meanwhile, Manhattan is at 232, and Honolulu and San Jose hover near 180+. This isn’t just an interesting map; it’s a structural shift. Here’s the analytical takeaway: 1️⃣Affordability has become the dominant driver of internal migration. People aren’t choosing cities based on prestige anymore; they’re optimizing for stability and cost efficiency. 2️⃣Migration patterns are redirecting capital flows. Cities like Oklahoma City, McAllen, Harlingen, Salina, and Muskogee show healthier rent-to-income ratios, steadier absorption, and lower volatility. 3️⃣The traditional “gateway-city premium” is breaking down. Record-high costs in Manhattan, Brooklyn, Queens, and coastal California are forcing both households and investors to redefine what “core” even means. If you want to understand where opportunity is forming in U.S. real estate, follow affordability. It remains one of the clearest leading indicators we have. #RealEstate #HousingMarket #USMigration #Affordability #DataDriven #UrbanEconomics #Multifamily #SecondaryMarkets #EconomicTrends #CostOfLiving Source: Council for Community and Economic Research (via Visual Capitalist)

Stop celebrating rent growth. This map tells a more dangerous story. This image shows rent burden by state in 2024, the share of renter households spending more than 50% of income on rent. Nationally, that number is 24.3%. In Florida, it’s 30.1%, the highest in the U.S. At first glance, many investors read this as demand strength. That’s the wrong conclusion. Here’s the problem. Rents have risen faster than wages. Supply surged unevenly. Insurance, taxes, and operating costs were passed straight to renters. When one in four renters is financially stretched, pricing power becomes fragile. Renewals slow. Delinquencies rise faster in downturns. And political pressure doesn’t wait for NOI to recover. This is why high rent burden is frustrating and costly. It looks like growth on paper. But it quietly increases operational risk, regulatory risk, and volatility at exit. The smarter operators are already adjusting. They’re not underwriting aggressive rent bumps. They’re watching where supply is rolling off, where rent growth can return without breaking affordability, and where efficiency beats escalation. This map isn’t a warning against investing. It’s a warning against lazy assumptions. If you’re underwriting deals the same way you did three years ago, this data should make you uncomfortable. And discomfort is often the first signal that strategy needs to evolve. Look closer. The opportunity isn’t where rent is highest, it’s where rent stress stabilizes before supply tightens again. Sources: Visual Capitalist U.S. Census Bureau, American Community Survey (2024 1-Year Estimates) Shimberg Center for Housing Studies #RealEstateInvesting #Multifamily #HousingMarket #RentTrends #RiskManagement #MarketAnalysis #InvestSmart

The Yardi March 2026 Multifamily report is here. 5 observations worth noting: --- 1. Weakest YoY March Growth on Record The average U.S. advertised rent rose $5 in March to $1,750, the first increase since last summer. Spring leasing season has arrived, and the gains were broadly distributed. But the 0.1% year-over-year growth rate is the weakest March on record going back to 2012. For context, the 2012-2019 average March growth was 3.6%. 2. Low Supply = Positive Rent Growth The pattern continues to hold. New York City (+4.5%), San Francisco (+3.9%), Chicago (+3.4%), Twin Cities (+2.5%), and Kansas City (+2.3%) are leading the way. Every one of these markets has trailing-12-month completions below 2.5% of total stock. Detroit (+1.4%) is worth watching too, with only 0.8% completions-to-stock, the lowest in the top 30. 3. High Supply = Negative Rent Growth Austin (-4.1%), Denver (-3.5%), Tampa (-3.4%), and Phoenix (-3.2%) remain the weakest markets. Austin's completions-to-stock ratio sits at 7.8%, nearly 3x the national average. Charlotte is absorbing 6.5% of stock in new supply, which explains the -1.4% YoY rent decline despite strong 2.7% job growth. Supply is the dominant variable. Takeaway: Watch Charlotte. Strong jobs + massive supply = a market that could swing quickly once the new supply pipeline clears. 4. Occupancy Softening Across the Board The national occupancy rate held at 94.3% but declined 40 bps year-over-year. Only two markets posted occupancy gains: Atlanta and San Francisco (both +0.2%). Tampa saw the largest drop (-1.1%), followed by Washington, D.C., and Houston (both -0.9%). Texas markets are especially soft, with Houston at 91.8% and Austin at 92.0%. Meanwhile, New York sits at 98.2% and New Jersey at 96.7%. The spread between the best and worst markets is now 5-6%. Takeaway: Continue to protect the back door. Renewals matter more than ever in a market where occupancy is eroding. 5. Iran Conflict, Energy Prices & AI Reshaping Growth This month's editorial section is stacked. Iran's blockade of the Strait of Hormuz is disrupting global supply chains and pushing energy costs higher, creating inflation risk and a "higher-for-longer" rate environment. At the same time, AI now represents one-third of corporate capital expenditures and the share is rising. J.P. Morgan's Tom Kennedy predicts U.S. economic growth will be driven by AI spending rather than consumers. Add in a K-shaped economy with spending concentrated in the top third of earners, reduced immigration, and a declining birth rate, and the demand picture for multifamily gets more complicated by the month. Anything here stand out or surprise you? How do you expect the Spring/Summer to unfold? - Trey (p.s. access to this report linked below) *** Follow me (Trey Wheeler) for more Multifamily content & sign up for my free newsletter below to receive it every Saturday.

Day 6 of 13 holidaying in Nafplio: : Problems created by ‘golden visas’ and short-term lets: Lessons from Portugal Portugal's housing market experienced a severe crisis due to government incentives, deregulation, and foreign investment. This is very similar to what has happened and is currently happening in Greece and Cyprus. Factors contributing to the crisis included: - Liberalization of the rental market, removal of rent controls, and lifetime tenancies led to skyrocketing rental prices, making housing unaffordable for many locals. - The introduction of "golden visas" and non-habitual residency schemes attracted foreign investment but contributed to rising property prices and reduced housing availability for locals. - Short-term rentals, driven by platforms like Airbnb, further strained housing supply, exacerbating the crisis. - The arrival of digital nomads, benefiting from a favorable tax rate, added to the pressure on the housing market. Greece and Cyprus should carefully review government incentives and foreign investment plans to avoid issues that could lead to inflated housing costs for locals. For example: - Investment money should go not only into housing, but also into projects like building schools and hospitals, as Ireland has done. - Investments should come with conditions, like making the property more energy efficient or choosing properties in specific areas needing development. Regulatory Measures: - Rent controls and lifetime tenancies can protect locals from big rent increases and make housing stable. - However, these are temporary measures. The best way to provide affordable housing is to make sure there is enough for everyone and not let short-term tourist rentals compete with locals, especially in crowded areas where lower-income groups live. - We should develop affordable housing programs and use empty city-center properties. Here are some examples beyond Portugal: o  Convert Empty Buildings: Cities like Detroit, USA have turned unused buildings into affordable homes. o  Vacancy Taxes: Cities like Vancouver, Canada tax empty properties, using the money for affordable housing. o  Cooperative Housing: In places like Zurich, Switzerland, empty buildings are turned into community-owned housing. o  Social Housing: Cities like Vienna, Austria buy, renovate, and rent out empty city-center properties at affordable rates. o  Rent-to-Own Schemes: Some places let government-owned property tenants gradually buy their home, like in the UK's council housing programs. By adopting these strategies, Greece and Cyprus could make housing more affordable, improve city areas, and promote diversity. Real estate data analytics companies like Ask Wire can play a vital role in providing transparent and up-to-date data on property prices, rental trends, and housing supply to inform policy and decision-making. #RealEstate #DataAnalytics #HousingCrisis #SustainableGrowth #AffordableHousing #Greece #Cyprus #Portugal

https://lnkd.in/gqsA-dYW In my recent travels, I have been alarmed at the tightness of rental markets throughout the midwest. Recent visits to Indianapolis (4.5% rental vacancy in 2023 per ACS - 1 year estimates), Green Bay (3.5%), Cedar Rapids (5.2%), Lexington (2.8%), Fayetteville (2.7%), Wichita (4.6%), Ames (3.9%), and Des Moines (3.4%) highlight the increasing tightness of rental markets across the midwest. Clearly, we shouldn't put too much stock in one year vacancy numbers in the post-pandemic period, but this appears to be more than an aberration. Homeless service providers have told me in these locations that it is becoming increasingly difficult to get people into housing...due to a lack of available and affordable housing. And, not surprisingly, these jurisdictions are now dealing with the challenge of increasing homelessness. This morning, the Wall Street Journal published a story about a landlord that has now invested $500mm in apartments in the midwest "lured by a lack of supply and signs of job growth in the region." The article opens by suggesting that the investment is "the latest wager that the region's lack of supply provides fertile ground for rent hikes." These pricing pressures will have dire consequences for households with limited resources. Of course, the response to this growing problem is complex and won't be fixed with one policy solution. We need more housing and we need to support low-income households to ensure that incumbent residents can continue thrive as cities grow and prosper.

Midwest Multifamily Boom: The $501M Bet You Shouldn’t Ignore What does it mean when one of the largest private owners of multifamily real estate writes a $501 million check—and it’s not in NYC, LA, or Miami? It means the smart money is moving where affordability + job growth = opportunity. The Big Move: Morgan Properties, one of the nation’s biggest landlords, just closed on a $501 million acquisition spanning 9,300 units across 18 communities in the Midwest. These aren’t luxury penthouses in high-cost metros. They’re workforce and middle-market apartments in places where rent is affordable, demand is steady, and competition from new supply is limited. Why the Midwest? 📈 Affordability Advantage – Renters can still find quality housing at a fraction of the cost of coastal markets, keeping occupancy high. 🏭 Job & Population Stability – Strong manufacturing, logistics, healthcare, and education sectors support consistent employment—and consistent renters. 🚧 Controlled Supply – Unlike overheated Sunbelt markets with oversupply risks, much of the Midwest is seeing limited new construction pipelines. 💰 Cap Rate Premiums – Higher yields compared to primary coastal metros allow for more attractive returns without speculative rent growth. The Bigger Picture: This deal signals a continued shift toward secondary and tertiary markets for institutional investors. While flashy gateway cities often get the headlines, cash flow and stability are winning over big portfolios. For smaller investors, the lesson is clear: You don’t have to be in the hottest market—you have to be in the right market. 📌 If you had $500M to invest in multifamily today—would you choose a high-growth Sunbelt city or a stable, affordable Midwest market? 👇 Drop your pick in the comments—I want to hear your reasoning. Reference: Morgan Properties Makes $501M Midwest Multifamily Acquisition: https://lnkd.in/et9Khy58 #Multifamily #CommercialRealEstate #RealEstateInvesting #CRE #MultifamilyInvesting #MidwestRealEstate #InstitutionalInvestors #RentalMarket #RealEstateTrends #InvestmentStrategy

The Multifamily Market Just Handed Us an Opportunity. Here's Why. 📊 Let me hit you with some numbers that should make every developer/investor stop and think: Multifamily starts? Down 74% from 2021. (CBRE, Q3 2024) Construction pipeline? Collapsing faster than anyone predicted. Everyone's panicking about oversupply. But the data tells a different story. Here's what actually happened: 2022-2023: Rates exploded. Projects stopped penciling. Starts fell off a cliff: down 70% from peak. (CBRE Research) 2024: That pipeline from the cheap money era kept delivering. 440,000 units hit the market. Vacancy climbed to 5.2%. (Fannie Mae, Freddie Mac) Rents? Negative growth in many markets for the first time in years. But here's what nobody's talking about (exception my friend Brad Hunter): Right now, for every 1.8 apartments finishing construction, only ONE is starting. (NAHB, Feb 2025) Read that again 👀: By 2026, deliveries will be cut in HALF. (CBRE) Ten of the sixteen largest markets already passed peak supply. The rest peak in 2025. The opportunity? It's staring us in the face. 🎯 → Cap rates jumped 155 bps from early 2022 to late 2023 (CBRE) → Cap rates now exceed pre-pandemic levels by 70 bps (CBRE) → Replacement costs? Through the roof from inflation → We can buy assets at pricing not seen in years While many are waiting for "the bottom," the opportunity is here now. Why this matters: The buy-vs-rent premium is still 32%. (CBRE) People literally cannot afford to buy homes, so they're staying renters longer. Job growth remains solid. Household formation continues. Supply is about to get TIGHT. Rent growth projected to accelerate to 4%+ by 2026. (CBRE, Freddie Mac) The timing for strategic acquisitions is becoming increasingly compelling. By late 2026, those sitting on the sidelines may find themselves competing for fewer opportunities at higher prices. This window won't stay open forever. ⏰ The best opportunities in multifamily happen when sentiment is worst but fundamentals are turning. We're in that moment right now. What are you seeing in your markets? Sources: CBRE US Real Estate Market Outlook 2025, Freddie Mac Multifamily Outlook, NAHB Market Research, Fannie Mae Multifamily Commentary #MultifamilyDevelopment #RealEstateInvesting #CommercialRealEstate #Apartments #CRE #MarketTiming #RealEstateDevelopment Southern Waters Capital