Multifamily has faced years of flat rents, elevated supply and rising costs—but is the market finally starting to turn?

Tyler Christiansen, CEOof Funnel Leasing, sits down with housing economist and host of The Rent Roll, Jay Parsons to unpack what’s happening across rental housing and what operators should expect next. They explore why development is becoming even more difficult, where rent growth could return first and why the next cycle will create clear winners and losers.

They also discuss:

• Why scale is becoming essential for developers
• How lower supply could reshape rent growth
• Whether multifamily has become too reliant on concessions
• What renter health data actually tells us
• Why demand remains strong despite sluggish rents
• The growing regulatory pressure facing operators
• Where AI and centralization can—and can’t—reduce costs
• Why Jay remains optimistic about multifamily’s future

Plus, Jay shares the thinking behind his new podcast, The Guest Card. 

Watch on the YouTube, Spotify, Apple, or wherever you get your podcasts. 

Building an audience for multifamily insights

Tyler Christiansen: Well, Jay, I’m really excited to have you back on the podcast, particularly to unpack what’s going on in the world of multifamily and all things rentals. To start, I met you a long time ago when you were still at RealPage.

I was an early fan, a longtime listener and, I guess, a one-time caller to The Rent Roll. I recently noticed that you’d passed 100 episodes. As you look back on the journey from when you hung up your own shingle to where you are now, is this what you envisioned? That you’d have this big audience of multifamily nerds?

Jay Parsons: No, man. Tyler, you and I have talked about this offline a little bit. I’m very blessed. I had no idea what I was doing. It’s funny—people sometimes ask me, “What’s the playbook? How do you do this?” I’m like, “Guys, I don’t know.”

I just do things that are interesting to me, and I’ve been very fortunate that other people have been interested in them as well. I started it primarily because, like you, I like to talk to people. I made the fateful mistake of giving myself a lot of work each week with a podcast format in which half is me talking about different headlines and data, and half is an interview.

I try to do something a little different, and thankfully it seems to be resonating with a limited audience, given that it’s not going to appeal to anybody outside of apartments and SFR. But it seems to have found its audience in this industry, so I’ve been really grateful for the reception it’s received.

Tyler Christiansen: Yeah, and you’re right. For those of us who like this stuff—I’ve told you that my dad and I talk about your show. You mentioned that you’re a glutton for punishment. You signed up to do this weekly. But tell everybody about your new format.

Jay Parsons: I’m a research nerd, so The Rent Roll is very focused on research data, asset management, investment topics and development. I don’t have many chances to talk about operations and technology. So much of the industry is focused on that, and I think it appeals to a different part of the industry as well.

I thought it would be fun to find a way to cover it through a different medium. It’s launching this week, and it’s called The Guest Card. It’s a play on words, of course, like The Rent Roll. As all of your listeners know, I’m going back to the old-school manila guest card: name, how many bedrooms, what’s your budget, when do you want to move in and what’s your lease term?

For this, the term length is 10 minutes. Tyler, we’re going to get you onto this. You’ll see it for yourself. We’re going to have a running 10-minute clock and try to cover as much ground as we can.

My hope is to appeal to a different audience that may not want to listen to a lengthy, one-hour podcast with a bunch of nerdy stuff, but wants to get to know the people and priorities involved. The bulk of the industry is property management and technology, and that’s a far broader audience.

I want to reach that audience in a digestible format. I’m really excited about this first episode that’s about to air. I hope everybody gets a chance to check it out. It’s with Heather Riggs from Continental Properties, who has been battling cancer.

Tyler Christiansen: Love Heather. I just emailed her a couple of minutes ago. You couldn’t ask for a better first guest. That’s awesome.

Jay Parsons: Yeah. I reached out to her first because she’s been battling cancer, but she has chosen to share her journey publicly in a very brave way.

Some people go through a trial and you feel like you need to encourage them, but they end up encouraging you. Heather is one of those people. She has the ability to be so encouraging. She loves her job, the people she leads and her team at Continental Properties. It was the best way I could think of to start this thing.

Tyler Christiansen: Oh, man. I already thought you were onto a winner with this, Jay. Heather and the great folks at Continental, including Paul Seifer, are big supporters of Funnel. We’re rooting for her.

She’s got this, and like you said, she’s inspiring the rest of us. It’s super cool. I’m excited to listen to that one. 

Why multifamily development is getting harder

Tyler Christiansen: Jay, one of the things I love about The Rent Roll and the work you do is that the content available to you is always so meaty.

When something happens, I want to know what Jay thinks about it. I was excited to see your post today about the Fed’s rate increase and the impact it’s having. You explained that the environment was already difficult for new multifamily starts, and it looks like it’s getting even more difficult.

What is the environment for development today, and why is it getting tougher?

Jay Parsons: I don’t think people fully understand how hard it is to get development off the ground right now. We’ve had four-plus years in which rents have been flat or falling, depending on the market. Unless you’re in San Francisco, where it takes five-plus years to build something anyway. That’s a real number, by the way.

In most of the country, rents are falling. That has been tough enough because you’re trying to pin your target rents to what has been a falling knife.

For people who are new to this, think about it: If you don’t know how much revenue you can get from a unit, how can you justify the cost of building it? That’s really hard.

Then you add higher interest rates. People hear the term “interest rates,” and I know some of you listening immediately understand why that’s difficult. For those who don’t necessarily know how this translates, think about buying or owning a house. They’re less common now, but there used to be ARM mortgages, or adjustable-rate mortgages. In the apartment industry or commercial real estate, we call them floating-rate mortgages.

That means your mortgage or debt costs can suddenly go from—just to make up numbers—$1,000 to $2,000 a month. Obviously, that can change your budget, and you might not be able to afford it. It’s a little different for a builder, but let’s say you were expecting a monthly mortgage payment of X and now it’s X times Y. That just got a lot harder.

Those two things were already happening. Now we have a third variable. We have new data from NMHC’s builder survey, coupled with the producer price index from the Bureau of Labor Statistics. It tracks the costs businesses face, including input costs for residential construction.

That is now up more than 7%—about 7.8% year over year—and that’s the biggest increase since 2022, I believe.

It’s another headwind. Tyler, the short of it is that it’s getting harder and harder to build. The other side is that all this supply has put downward pressure on rents for operators. Now that supply headwind is going away, probably for a significant amount of time, it could eventually push rents up.

Tyler Christiansen: I want to come back to that in a second. To your point, we both do this because it’s genuinely interesting. I’m fortunate to work with a lot of different operators. Folks like Continental, whom we just referenced, are great developers, and they’ve been growing.

Here in Florida, we work with the wonderful folks at Hillpointe up the road in Orlando. They’re building. Compared with historic numbers, we’re not seeing many developers building 10,000-plus apartments.

This is more of an entrepreneurial question: Is this difficult growth environment one in which scarcity is creating innovation, with some people working on the margins and figuring it out?

Hillpointe talks openly about being vertically integrated. They’ll say, “We grow our own trees. That’s how we manage construction costs.” Is that how some groups are still getting properties built?

At other times, when I talk to my friends at the REITs, they say, “We wish everyone would stop building these apartments. We’re still working through this backlog of supply.” You’ll sometimes hear them point the finger and say merchant builders receive a fee regardless, so that’s why the supply is coming.

Are the groups getting properties out of the ground simply entrepreneurial and finding niches in the right markets? Or is the fact that we’re still seeing development a reflection of different incentives?

Jay Parsons: That’s a great question. First and foremost, I hear that argument from the REITs. The reality is that merchant builders aren’t like REITs, which can spend on balance sheet and essentially build from their bank accounts. A merchant builder has to talk institutional capital into investing in a deal. That is really hard to do right now. If you’re able to do it, hats off to you, because you’ve probably found a way to make the deal work.

Look at the bigger developers. You mentioned Hillpointe, Continental, JPI, Greystar and NRP. I’m sure I’m leaving out many of my friends. Those builders have to do a lot of things and check a lot of boxes.

You mentioned Hillpointe, but they aren’t the only example. In decades past, every apartment building might have been boutique and unique to its site. You’d hire an architect, do the whole thing and hire trades.

Now it’s much more—this will sound like the wrong word—cookie-cutter. It’s, “I’ve got a set of plans. I’m going to plant it here, and I’m going to do it there.” The architect is doing much less work than before.

You also know exactly how much lumber and how many windows you need, and you can buy those materials in bulk. You have more trade crews in-house than you did in the past. A lot of these things require significant scale.

I talk to some groups that say, “We’re still seeing a lot of construction.” Yes, because you’re talking to the same five builders, who are among the 20 largest builders in the country. They can remain active because they can do many different things. They’re also looking at 10,000 sites a month to find the one that works.

Here’s a great statistic that many people might not realize: 75% of apartment construction is done by small, local groups that most of us have never heard of. It’s a very fragmented industry.

Many of those groups raise money from friends, family and high-net-worth individuals in their markets. They have a lot of capital tied up in existing projects and haven’t been able to sell those deals, get that money out and recycle it into the next deal.

It’s a survival-of-the-fittest environment. This isn’t so much about consolidation as it is about the fact that groups with scale can remain active in this environment, while groups without it are struggling to continue.

How scale and standardization keep projects moving

Tyler Christiansen: I love that answer. To your point, Hillpointe is building these communities with scale and continuity—so much so that its centralized operations team provides virtual tours from a central leasing office because the model is the same at every community.

They have a centralized gym at this virtual contact center, where they can give you a tour of an on-site gym from an office in Orlando because all the gyms across their new developments look the same. There is some of that among the groups that can get development done, but it isn’t broadly applicable.

When rent growth could return

Tyler Christiansen: Let’s turn to the headwind everyone is dealing with: the lack of rent growth. We’ve been saying for years that the lack of new starts will eventually turn the corner, and places other than San Francisco will see rent growth.

You referenced this in your post. As interest rates rise, do we think the timeline for rent growth is pulled forward? Is it that simple? Obviously, it varies by market.

But if I’m not a developer—if I’m an owner, operator or REIT—should I view this as the future being pulled forward because the supply well is inevitably going to dry up?

Jay Parsons: I think that’s fair. Now that I’m not at RealPage anymore, I can give my friends at the data providers a little bit of a harder time. Data providers are in a tough spot because there’s so much “now-ism” in forecasting. If you’re an operator, you always want to be conservative in your budgeting and forecasting.

Take a place like Austin. It has been the poster child for high supply. Austin is never simply a 2.5%-growth market. Forecasting 2% for the next three years isn’t realistic. Austin is more like negative 5% or positive 5%. It’s boom-or-bust, with big swings in either direction.

We’re already seeing that. There are places like Boise, which I wrote about the other day. Boise went from negative growth to plus 8%. Not long ago, Boise was left for dead. People were saying, “This market is oversupplied. No one is going there anymore.” 

Obviously, you always want to be conservative and smart. But don’t be surprised if some markets turn faster than you might think. Once that supply spigot turns, if there’s still growth moving into these markets, it doesn’t have to be 2021-level growth. If you have some growth and very little supply, these markets can heat up quickly.

We thought the construction slowdown might last a couple of years. Now it could last longer than that. I don’t think it’s as much about pulling the recovery forward as it is about extending the period in which we could be in a lower-supply environment.

Cost control, marketing and the staying power of technology

Tyler Christiansen: That’s an interesting way to look at it—the longer the hard times, the longer the good times. The reason I love the nuance you bring to the conversation is that I came of age as a technologist while building Funnel in the ZIRP era of 20% rent growth. That level of rent growth always felt unsustainable to me.

I think we saw the industry backlash to it, including many of the regulatory conversations around it. As much as I’d like to see a healthy rent-growth environment, hopefully it’s a sustainable one.

One of the things we often hear—and that I’ve heard you discuss—is cost management in a low-rent-growth environment.

Here’s a great insight, and a commercial for your podcast, because everyone should follow The Rent Roll. A few years ago, you talked about increases in marketing spending in response to the competition for demand. That showed up in many ways for our customers.

We’re in or just past budget season, depending on the organization. In markets that are in year three, four or five of low rent growth, are there trends you’re seeing? Are there still more costs to cut?

When I was a guest on your podcast, the first question you asked me was, “Are these AI cost savings real?” They are in certain cases when you centralize, but many people have realized AI isn’t a silver bullet. You can’t throw AI at a single property and magically reduce much of anything.

What is the conversation around cost controls in an environment where I might be able to underwrite some rent growth two or three years from now? Are people still sharpening the pencil even more on the budget side?

Jay Parsons: My sense going into this year’s budget season was that expenses felt much more predictable than they had at any point since before COVID.

Many expense categories—maybe these are famous last words—felt like they were smoothing out. People thought, “All right, we think we’ll be in the 2% to 3% range.”

As it relates to marketing, I hear many different things, and much of it is anecdotal. There have been so many vacancy challenges amid all this supply. How do we backfill those vacancies? There’s still a lot of nervousness about ratcheting down traditional advertising channels. My sense is that many people realize traditional listings probably aren’t the best source of leads anymore, but they still need leasing traffic.

I think we’re still a bit tethered to those channels. Maybe that will evolve in the next cycle as markets normalize.

The other thing I’d say, going back to our first conversation, is that even as rents start to recover, the efficiency habits we’ve gained during this cycle aren’t going away.

People are starting to realize—and I mean this sincerely, to the credit of software like yours—that they can do things faster and more efficiently without hurting quality. In many cases, if it’s done correctly, technology combined with the right people can help them do things better through specialized teams and tools.

That aha moment isn’t going away. It’s, “If we can do this more efficiently, faster and better, why would we stop?” That’s much more accepted now, and my sense is that we’ll only build on it as the revenue side of the ledger improves.

Why AI-enabled service is becoming essential

Tyler Christiansen: One hundred percent. I’ve been in multifamily long enough to see at least a couple of technology cycles. The first tool I sold to multifamily operators was websites, circa 2013.

At that time, the debate was about the ROI of a website versus the little book at the grocery store. It was probably difficult to prove the tangible ROI, especially with poor lead tracking back then. But nobody questions whether you need a website now.

Similarly, in the very early innings of AI, there were many conversations—and I understand them—about whether it was really worth it. Show me the ROI. Show me the NOI impact. That’s nearly impossible.

But what you don’t hear is people saying, “I don’t want it.” There’s downward pressure on technology across the board, with people saying, “I can get the same value somewhere else.” But on-site teams and consumers don’t want to wait until Monday afternoon for help scheduling a tour. They want it when they want it. I think we’ll continue to see that trend.

Concessions, pricing and the customer experience

Tyler Christiansen: On a similar topic—something else that’s proving sticky and isn’t going away—I’ve been surprised by how much concessions have become part of the industry.

You mentioned the need for leasing traffic. I’ve led sales organizations my entire life. When you don’t feel like you’re hitting your numbers, the reaction is, “Do what you have to do. Get them in the door and get that lease signed.”

It varies by market, but have concessions simply become a leasing tool and part of the multifamily vernacular again?

Jay Parsons: Yeah. I’d be interested in your take as well, but I talk to many property and asset managers. I increasingly think—and I want to be careful here because many people are doing a good job—that we’ve trained many leasing agents to rely on concessions to lease units instead of selling their value.

I’m not a leasing agent, by the way. I don’t want to tell people what to do. There are things I know well and things I don’t. Leasing a unit isn’t my area of expertise.

But I think we’ve come to rely on concessions a lot during the past few years, and not just for lease-ups. In many cases, renters have come to expect a deal.

You have two options. If you’re going to offer a concession, you can lead with it. Or you can compete by saying, “Here’s our base effective rent.” That’s what groups like Camden do. They give you an upfront price, which is probably better for you in the long run. There’s more certainty around the renewal as well.

My running joke is that asking rent is now like MSRP for cars. It’s a magical, mythical number. It isn’t a real number.

If somebody tells you the market rent is X, but you don’t actually sign leases at that rate, it isn’t your market rent. It’s just an advertised number.

If you use concessions and train your teams to use them, that’s great. But I would do two things. First, don’t assume the concession will burn off in a year, because it probably won’t. Second, be realistic about your market rents, because your market rent isn’t necessarily your asking rent.

Tyler Christiansen: Well said. That answer reminds me of Joanna Zabriskie’s answer on your show when you asked her about fee transparency. She said, “We want it, but if everybody is marketing a certain way, it’s really hard not to play the game.”

I don’t want to call regulation positive, but directionally, as an industry, we’ve become much better about fee transparency and total monthly lease pricing.

Jay Parsons: And that is a positive, I think.

Tyler Christiansen: Yeah. I think the inverse point about this low-rent-growth environment is that we’ve made the consumer a customer.

You’re absolutely right. Jay, you and I have 10 kids between us. I just bought a car—the second car I’ve had to buy for a child.

I’ve trained myself that, as much as I absolutely despise going to car dealerships and would much rather buy on Carvana because it’s a better experience, I can get the discount if I go to the dealership, sit through the spiel and talk to the manager.

Unfortunately, I think we’ve trained leasing associates in a similar way. You asked for my opinion. I’ve always believed that when the majority of people operate one way, it creates opportunities on the margins.

You mentioned Camden, BH and Cortland. Some of these groups truly believe that if they deliver a better experience, follow up more quickly and provide quality customer service, it will show up in revenue.

But the prolonged lack of rent growth makes it tougher. Unfortunately, many people come back to, “If they’re giving two months, I’ll give two and a half to get that lease signed.” We may be here for a while.

Understanding renter health in a K-shaped economy

Tyler Christiansen: The other related topic I wanted to ask about is the overall health of the renter. One thing I love about your quarterly REIT report is that you cover the shrinking number of public REITs. It may end up being a pretty short summary if they all keep getting together. But you also always talk about renter health.

One point you bring up is that data from the MAAs, UDRs and Essexes of the world shows renter health is pretty good in terms of rent-to-income ratios. As we look at the broader economy, it’s certainly something we want to watch. Are there leading indicators in consumer price index reports or unemployment rates that make you think we may need to start worrying about those rent-to-income ratios?

Jay Parsons: I appreciate that, Tyler. This is a topic I feel very passionate about. We can go deeper if you’d like, because many investors, policymakers, reporters and even operators don’t have a good handle on it. The data is very clear that we increasingly have this K-shaped economy of haves and have-nots.

The top half of the rental market isn’t rent-burdened. They’re spending 21.5% of their income on rent. The bottom half of the rental market is very rent-burdened. People making less than $50,000 spend, on average, more than 50% of their income on rent, which is terrible.

We simplify this issue too much on both sides. The REITs say it’s a non-issue, while the headlines say it’s a major issue.

The reality is that it isn’t an issue for a significant part of the market, including renters of REIT properties and their peers. It is a major issue for our culture at large. We have to do a better job focusing on where those needs truly are.

What strong apartment demand really looks like

Tyler Christiansen: To that point, it can be easy to think about rental housing the way we think about the airline industry. Are airline ticket prices up or down? There are only five or six major airlines. But we’re a highly fragmented industry serving a third of North Americans, and those needs are very different.

To your point, a lot of development is Class A. The REITs serve the top end of that K-shaped economy, while the situation can be very challenging in other parts of the market.

This is my own opinion, but when we look at the K-shaped economy, much of our GDP growth is coming from a small portion of the economy—specifically the AI boom and the build-out associated with it.

For national operators, it will be fascinating to see whether any speed bumps or hiccups emerge in the data-center build-out across the country, which is adding a lot of employment and job growth. Will that show up in the broader rental-housing economy?

As you said, San Francisco, where much of that growth began, is in a very different position from the rest of the country, where we’re still asking whether rent growth is coming back.

If you only looked at the headlines, you might ask whether demand is truly strong. If demand were strong, wouldn’t rent growth be there? If demand were strong, wouldn’t concessions disappear? But there’s more nuance to it.

For people who don’t listen to your show, could you talk about absorption? You’ve used Austin as an example in the past. It’s a boom-or-bust city, but despite all the new supply, demand and absorption have been there, even though rent growth hasn’t returned to its previous levels.

Jay Parsons: That’s a great topic. I’ll connect the two things you just mentioned.

You commented earlier that growth in the economy is concentrated in a few sectors. There’s an interesting subtrend affecting apartment demand: Job growth has been concentrated in a handful of categories unrelated to AI but insulated from it.

It’s centered on fields like education, healthcare and other service-related jobs, which tend to be heavily female categories.

An article written recently—and highlighted on my podcast—showed that almost all job growth during the past two years has been among women. Men have basically experienced no job growth in two years.At the same time, women now account for about 58% of college graduates. If you talk to Class A apartment property managers, they’ll tell you that most of their residents are women.

It’s interesting for two guys sitting here talking about this. But there are important sub-trends in the economy, and much of it comes down to micromarkets.

The jobs near you can affect leasing demand at your property. If you’re near major call centers and that’s a large part of your employment base, jobs lost to AI could have a significant impact.

That will affect you more than if you’re located near a state capital, major university or something else that isn’t affected in the same way.

More broadly, there’s still good demand out there. It’s just coming from narrower categories.

The absorption story has been very positive. There has been a lot of attention paid to slowing migration in places like Austin. But people sometimes lose sight of the fact that just because migration isn’t as high as it once was doesn’t mean it isn’t still good.

In many cases, it has simply reverted from incredibly hot to good. In Austin, for example, supply is coming down and absorption remains very good. That looks like the beginning of a potential rent rebound in that market.

Demographic shifts and the markets poised to win

Tyler Christiansen: Thanks for tying those two questions together. I want to end with some look-ahead predictions.You’ve talked about the fact that rentals are a very local topic. It depends on the jobs and supply in your area. You’ve also discussed demographic shifts and trends. As someone with high schoolers, I was recently studying a Census Bureau finding that we’re at “peak 18-year-old.” Have you seen this? There’s a kind of enrollment apocalypse coming for colleges. Class sizes are going to decline dramatically. For economists like you who love studying macroeconomics, it’s easy to go back 18 years and understand why.

It makes me feel very old because I graduated from college during the Great Financial Crisis. Now I have a daughter who will be going to college in a couple of years. People had fewer children at the end of the Great Financial Crisis than during the boom years leading into it.

From a prediction perspective, considering the demographic trends, is there one housing sector—student, senior or Class A—that you think has significant tailwinds?

Jay Parsons: Man, I love this question. I’m going to cheat a little. I don’t think it’s about sectors as much as subsectors. I’ll give you an analogy. The student-housing story is something I’m very interested in. What’s happening in student housing right now is a preview of what’s going to happen in market-rate rental housing.

We talked earlier about the K-shaped economy and its haves and have-nots. The same thing is happening among college campuses.

If you’re a Power Five or Power Four school, or a major brand-name private school, you’re booming. You’re doing just fine. Demand is great, and you see no sign of the decline in the college-age population.

If you’re a regional school or a directional state school, however, many are struggling with enrollment declines and very low demand for student housing. It has created a separation between haves and have-not campuses.

My thesis is that we’ll see the same thing happen in the apartment market during this next cycle. More desirable locations will win—not just entire MSAs, but individual neighborhoods within them.

I live in Dallas. Dallas will probably continue to be a growing MSA, but I think there will increasingly be neighborhoods in Dallas and the surrounding MSA that are left behind, while others boom. I think the same thing will happen in Tampa, Atlanta and elsewhere. That’s how this demographic story will play out.

History tells us these impacts are rarely distributed evenly. It’s about trying to identify the winners. Where do people want to be?

The regulatory outlook for rental housing

Tyler Christiansen: Let me ask another prediction question. When you’ve spoken to our audiences before, one question that comes up is the regulatory environment. We still see headlines, particularly in markets like New York. Considering all the factors we’ve discussed, what do you think we’ll see during the next 12 to 24 months? Will there be fewer, the same number or more ballot initiatives involving rent control or rent-control-adjacent movements?

Jay Parsons: Man, I’m going to be depressing now. I think there will definitely be more.

A lot of people like to say, “Red states, not blue states.” But it isn’t that simple anymore. I think it’s more about politically sane versus politically insane—stability versus volatility. There’s a rising wave of populism—“sloppulism”—from both parties. We saw it with the ROAD to Housing Act as it relates to the SFR space, and I think it will affect the multifamily market over time too.

It’s funny: The public and the media use the word “landlord,” but our industry never uses that term. Landlords aren’t popular with either party.

There’s a lot of frustration around inflation, the cost of living and housing costs. Everybody listening to this program knows those costs are also a challenge on the operating side. It isn’t a high-margin business.

But it’s easy to point the finger at landlords and say, “They’re greedy.”

I think these challenges will continue. We’ll see more ballot measures, and it isn’t just rent control. There are peripheral issues involving screening tools, rent-payment histories and similar policies.

It will become harder and harder. One unintended consequence will be greater consolidation among property managers. The question will be: Do you have the resources to compete in a highly regulated market?

Smaller groups will have a hard time staying afloat in that world.

Tyler Christiansen: Unfortunately, I’m sad right along with you. I’d like to think we’ve proven as an industry—and I’ll go off script here—that revenue management was never to blame, unless it also receives credit for the rent retraction. Supply and demand are clearly what drive prices up and down. But that story doesn’t seem to be getting out enough.

People don’t talk enough about Austin, Tampa, Miami, Salt Lake City and all these markets that experienced extremely high rent growth and are now flat or declining.

Jay Parsons: I’ll tell you one more thing. I’m not a cynical person by nature, but it’s hard not to be cynical about some of these challenges.

Consider San Francisco. The city banned revenue-management software, and since the ban, rents have gone up 41%. Did rents go up because the city banned revenue management? Obviously not. It’s supply and demand.

But two things were discouraging. First, for all the fanfare around the importance of the ban, none of the articles said, “They banned it, and it turned out not to work.” Nobody said that.

Second, the city ultimately declared a rent emergency and blamed landlords for raising rents, even without the software. Can we get serious and address the root issue? It’s so frustrating.

Reasons for optimism in multifamily

Tyler Christiansen: You’re right. The data couldn’t be clearer, yet that narrative isn’t convenient.

What makes you optimistic about the future of multifamily or multifamily technology as you consider the opportunities during the next five to 10 years?

Jay Parsons: All the challenges we’ve discussed are very real. But the long-term opportunities in rental housing and apartments are also very real. One thing COVID taught us is that apartments are essential. You can shop from anywhere and work from anywhere, but you need a place to live. Apartments provide that place. To all the property managers out there: You work an essential job, providing housing to people who need it.

As we continue seeing mounting cost pressures for homebuyers, it’s ironic that people say so often that “the rent is too high,” because the discount for renting versus buying has never been higher.

A better question might be: Why aren’t rents higher than they are? The answer is supply. We built a lot of it.

The value proposition for apartments is very high. There are short-term challenges, absolutely. But it’s easy to wonder whether apartments are going through what happened to office. With office properties, some groups want to get out of the sector entirely because they don’t believe there will be a long-term need for it. I’m not saying whether that’s right or wrong. But nobody has said, “Apartments are finished.” People still need apartments. My first point is that we need housing, and apartments provide it.

Second, the supply headwinds we discussed are very real. Supply has been the biggest headwind for apartment revenue growth during the past few years. Those headwinds are going down. We’re about to enter a lower-supply environment, and I think the operating environment will improve as a result. Particularly for the upper end—the Class A and B segments—those tailwinds are still intact. I think this next cycle will be much more about NOI execution than pure appreciation and cap-rate compression, as in the prior cycle. Even in a poorly performing apartment market, you could be 90% occupied. That’s still pretty good compared with a 0%-occupied office or retail building. Relatively speaking, it’s a pretty good floor.

A more resident-centered industry

Tyler Christiansen: Well said. I have a lot of friends in the office-space industry, and they would die for our occupancy levels and optimism. I’ll close by saying that I’m obviously a huge fan of what you do. I think this industry has a community and a communal sense of purpose, mission and learning.

When I entered multifamily, I started working for my dad’s firm as a “dirt dog,” as they called me: “Go look at this piece of land for free.” It was an industry that, to your point, sometimes called itself landlords. Not the good operators—not the Archstones or Camdens of the world—but many people said, “We’re just providing housing. We’re landlords, right? We have tenants.”

We’ve come a long way in understanding our responsibility as an industry to provide communities for residents.

I think the work you and your team do to create stories and narratives around the services we provide is important. Landlords aren’t the bad guys; they’re housing providers. I’m optimistic that, over time, we can shift that perception, although there will be challenges in the short term.

Keep fighting the good fight, Jay. Thank you for everything you do to put that narrative out there.

Jay Parsons: Thank you as well. I appreciate everything you’re doing, and I always enjoy chatting with you.

Tyler Christiansen: All right. Thanks, Jay.