Jay Parsons

Rental housing economist, Dad x5 and suffering Cowboys fan ... Rental housing is essential, misunderstood and we need more of it.

[Jay Parsons @jayparsons]

*UPDATED* (and still true)

When you build "luxury" new apartments in big numbers, the influx of supply puts downward pressure on rents at all price points -- even in the lowest-priced Class C rentals. Here's evidence of that happening right now:

There are 21 U.S. markets where Class C rents are falling at least 4% YoY. What is the common denominator? You guessed it: Supply. Of those, all but one have supply expansion rates ABOVE the U.S. average.

There's no demand issue in any of these 12 markets. They're all among the absorption leaders nationally -- places like Austin, Phoenix, Salt Lake City, Raleigh/Durham, Atlanta, Tampa, Dallas, Charlotte, Orlando, etc. But they all have a lot of new supply.

Simply put: Supply is doing what it's supposed to do when we build A LOT of apartments. It's a process academics call "filtering." New pricey apartments are pulling up higher-income renters out of moderately priced Class B units, which in turn cut rents to lure Class C renters, and on down the line it goes.

Less anyone still in doubt, here's another factoid: Where are Class C rents growing most? You guessed it (I hope!) -- in markets with little new supply. Class C rent growth topped 4% in 22 of the nation's 150 largest metro areas, and nearly all of them have limited new apartment supply.

Most new construction tends to be Class A "luxury" because that's what pencils out due to high cost of everything from land to labor to materials to impact fees to insurance to taxes, etc.

So critics will say: "We don't need more luxury apartments!"

Yes, you do. Because when you build "luxury" apartments at scale, you will put downward pressure on rents at all price points.

Spread the word.

[Jay Parsons @jayparsons]

@rustydish2331 Yes, that is true but it was even more true last year and the year before too. Still a renter's market.

[Jay Parsons @jayparsons]

Apartment rents continue to bounce back ... like a partially deflated ball.

YTD rent growth is at 4-year high, but well below pre-pandemic norms.

Latest in the newsletter.

[Jay Parsons @jayparsons]

Link to the newsletter: https://t.co/qoPjEmF61q

[Jay Parsons @jayparsons]

@j_asherscoville Yup, but conspiracy theorists like to ignore the fact that millions of teachers and firefighters etc are the real people behind the big names.

[Jay Parsons @jayparsons]

Regardless your thoughts on "private equity," there is no question we would have many millions of fewer housing units in the U.S. without it.

[Emily Wilkins @emrwilkins]

Elizabeth Warren on why the housing bill is big Congress's relationship with private equity:

“Never before has Congress put any restriction on the ability of private equity to move into whatever industry they want, buy up whatever they want, and destroy whatever they want."

[Jay Parsons @jayparsons]

@mnolangray 100% agree. I love visiting those cities, especially those in the Midwest with some history and character mixed with local coffee, local foodie scenes, breweries, boutique hotels etc.

[Jay Parsons @jayparsons]

@pdubdev Read my tweet. It's still true. Multifamily is housing. I don't get your gripe-- petty.

[Jay Parsons @jayparsons]

@pdubdev multifamily specifically, i should have been more clear. and saying it's "demonstrably false" -- come on dude, don't be that guy with bad hot takes. REITs and individual families represent a drop in the bucket. nearly everything else is some form of "private equity."

[Jay Parsons @jayparsons]

@captjackburton @JohnnyDrama0 Yes, for sure, I was just responding to prior commenter referring to a couple developers.

[Jay Parsons @jayparsons]

The Census is just catching up with reality.

Remember: Census data on multifamily starts missed the peak of prior cycle, then played some catch up. No surprise.

Real-life starts peaked in 2023, plunged in 2024-25 and now plateauing.

[zerohedge @zerohedge]

Multi-family housing starts (rentals) unexpectedly crater to 284K SAAR from 486K, 3rd lowest since covid

[Jay Parsons @jayparsons]

@YIMBYLAND Yes, individual council fiefdoms has been a killer for downtown.

[Jay Parsons @jayparsons]

@VALUBULL28 Reportedly it preserves House language on BTR which protects most BTR.

[Jay Parsons @jayparsons]

There it is, finally.

[Brendan Pedersen @BrendanPedersen]

🚨 HOUSING NEWS: WE HAVE A BICAMERAL DEAL

House Financial Services Committee French Hill (R-Ark.) dropped his opposition to the latest Senate text this afternoon after negotiators agreed to last minute changes

Senate will vote on housing bill this afternoon. Scoop in PBN texts

[Jay Parsons @jayparsons]

@JohnnyDrama0 Some of bigger guys are still active yes but historically 75% of apartment starts are small local groups who face tougher environment, higher cost of capital, few efficiencies of scale etc. Incredibly fragmented business, far more than homebuilding.

[Brendan Pedersen @BrendanPedersen]

The four corners of financial policy leadership on Capitol Hill make their bicameral housing bill official with this press release

Welcome to the world, bicameral 21st Century ROAD to Housing Act

[Jay Parsons @jayparsons]

@robbiehendricks yes, or if you subscribe to a higher quality dataset than the Census for multifamily construction.

[M. Nolan Gray 🥑 @mnolangray]

A new NAHB study estimates that regulations and fees increase the cost of a typical new home by 26%, or around $131,734.

[Jay Parsons @jayparsons]

@MakeUSAVAT From this article, it sounds like the House BTR/SFR language remains intact.

[Jay Parsons @jayparsons]

Here we go again.