1 00:00:10,119 --> 00:00:14,040 Speaker 1: Hello, and welcome to another episode of the Odd LODs podcast. 2 00:00:14,080 --> 00:00:17,560 Speaker 1: I'm Joe Wisenthal and I'm Tracy Halloway. Tracy, you know 3 00:00:17,600 --> 00:00:22,840 Speaker 1: what I'm not looking forward to? Uh, it could be 4 00:00:22,880 --> 00:00:25,319 Speaker 1: any number of things, but what Well, I got a 5 00:00:25,360 --> 00:00:30,000 Speaker 1: pretty I got a decent price on a rental in 6 00:00:30,120 --> 00:00:33,360 Speaker 1: my where I live in Manhattan, moved during the pandemic. 7 00:00:33,400 --> 00:00:35,880 Speaker 1: I did, like, I got a pretty good pandemic deal, 8 00:00:36,560 --> 00:00:39,280 Speaker 1: and I am not looking forward and I think, like, 9 00:00:39,479 --> 00:00:41,920 Speaker 1: you know, yeah, pretty good rent. I'm not. I'm worried 10 00:00:41,920 --> 00:00:44,600 Speaker 1: that at some point, like the cut, my landlord will 11 00:00:44,840 --> 00:00:47,520 Speaker 1: perceive that like there's a gap between what we're paying 12 00:00:47,720 --> 00:00:49,640 Speaker 1: and what the market prices are, and that my rent 13 00:00:49,640 --> 00:00:51,839 Speaker 1: bill is going to shoot up. Well, i got a 14 00:00:52,320 --> 00:00:56,640 Speaker 1: not very good deal on a rental post pandemic last year, 15 00:00:56,720 --> 00:00:59,440 Speaker 1: and I've already gotten my one year, um like rench 16 00:00:59,520 --> 00:01:03,720 Speaker 1: renewal notice and it was an automatic five percent pay increase, 17 00:01:03,840 --> 00:01:06,640 Speaker 1: which kind of sucks. Yeah that's not great. But wait, 18 00:01:06,680 --> 00:01:08,840 Speaker 1: you did you did negotiate with them a little bit? 19 00:01:09,160 --> 00:01:12,480 Speaker 1: I did. I said, I said, is there any way 20 00:01:12,480 --> 00:01:16,360 Speaker 1: we could compromise on the rent, to which their response was, uh, 21 00:01:16,560 --> 00:01:20,399 Speaker 1: they k not seventy five dollars off of their used 22 00:01:20,640 --> 00:01:23,640 Speaker 1: off their proposed hikes. I'm saving myself seventy five dollars 23 00:01:23,640 --> 00:01:26,440 Speaker 1: a month, which relative to the counterfeits I am. I 24 00:01:26,480 --> 00:01:30,679 Speaker 1: am grateful for the gesture. However, relative to um the 25 00:01:30,760 --> 00:01:35,920 Speaker 1: substantial New York rent, um, it's not it's not that much. 26 00:01:36,319 --> 00:01:38,720 Speaker 1: I tried, so we know that, Like, all right, So 27 00:01:38,760 --> 00:01:41,360 Speaker 1: obviously rent is really important for all kinds of reasons. 28 00:01:41,400 --> 00:01:44,319 Speaker 1: It's another one of these highly salient prices that people pay. 29 00:01:44,360 --> 00:01:48,000 Speaker 1: It's a huge component of the inflation measures. What we 30 00:01:48,160 --> 00:01:51,080 Speaker 1: know about the measures of rent seemed to be two things. 31 00:01:51,240 --> 00:01:55,400 Speaker 1: One is various private sector measures seemed to have been 32 00:01:55,440 --> 00:01:58,520 Speaker 1: turning down for a while. That's clear, And it also 33 00:01:58,640 --> 00:02:01,680 Speaker 1: seems like um uh, it's only a matter of time 34 00:02:01,760 --> 00:02:04,840 Speaker 1: before that feeds into the official measures that the Fed 35 00:02:04,920 --> 00:02:06,960 Speaker 1: likes to look at. We had a good episode last 36 00:02:07,040 --> 00:02:09,639 Speaker 1: year with Sharif talking about why there's that gap and 37 00:02:09,720 --> 00:02:12,880 Speaker 1: how to think about reconciled these two measures. But like, 38 00:02:13,080 --> 00:02:15,040 Speaker 1: how far is it going to come down? Will there'll 39 00:02:15,040 --> 00:02:17,200 Speaker 1: be a year in which our rent doesn't go up 40 00:02:17,240 --> 00:02:19,280 Speaker 1: at all? Well, other people and other parts of the 41 00:02:19,320 --> 00:02:21,480 Speaker 1: country seat rent. This is like a huge topic We've 42 00:02:21,520 --> 00:02:24,000 Speaker 1: never actually done like a pure rent episode as far 43 00:02:24,040 --> 00:02:26,040 Speaker 1: as I know, No, we haven't. And there are all 44 00:02:26,080 --> 00:02:28,560 Speaker 1: these interesting little things you can start to pick out 45 00:02:28,560 --> 00:02:31,160 Speaker 1: of the topic. So, for instance, you know, in New York, 46 00:02:31,280 --> 00:02:33,360 Speaker 1: maybe rents are starting to come down now, but not 47 00:02:33,520 --> 00:02:36,160 Speaker 1: nearly as quickly as in other parts of the country. 48 00:02:36,440 --> 00:02:39,639 Speaker 1: New York is a big part of rent c P 49 00:02:39,880 --> 00:02:42,840 Speaker 1: I right, and so if New York prices stay sticky, 50 00:02:43,120 --> 00:02:46,400 Speaker 1: it could have an overall effect on on national rent prices. 51 00:02:46,680 --> 00:02:49,600 Speaker 1: And also I'm I'm interested in talking also about some 52 00:02:49,680 --> 00:02:52,040 Speaker 1: of the big picture developments that we have seen in 53 00:02:52,080 --> 00:02:54,520 Speaker 1: the space. You know, people talk a lot about private 54 00:02:54,560 --> 00:02:57,720 Speaker 1: equity moving into multy family housing, whether or not that's 55 00:02:57,760 --> 00:03:01,560 Speaker 1: pushing up prices, uh, the impact to new technology as 56 00:03:01,600 --> 00:03:05,480 Speaker 1: well on how landlords actually come up with the prices 57 00:03:05,520 --> 00:03:08,440 Speaker 1: that they charge people for their buildings. Lots to talk about. Well, 58 00:03:08,440 --> 00:03:10,919 Speaker 1: you know, and we did talk about this recently with Connerson, 59 00:03:11,000 --> 00:03:13,200 Speaker 1: who I thought made a really fascinating point, which is 60 00:03:13,240 --> 00:03:18,000 Speaker 1: that like the rent apartment rent specifically multi family housing, 61 00:03:18,400 --> 00:03:20,840 Speaker 1: it just has gone from strength to strength over the 62 00:03:20,919 --> 00:03:22,840 Speaker 1: last like fifteen years. You know, It's like after the 63 00:03:22,880 --> 00:03:25,440 Speaker 1: Great Financial Crisis, no one's gonna want to own a 64 00:03:25,440 --> 00:03:29,000 Speaker 1: home anymore. Let's rent um millennials don't want to live 65 00:03:29,000 --> 00:03:30,840 Speaker 1: in the suburbs. Let's move to the city and rent 66 00:03:30,919 --> 00:03:35,320 Speaker 1: millennials are delaying having kids, let's you know, no reason 67 00:03:35,360 --> 00:03:39,280 Speaker 1: to you know more rent. Like at every turn, multi 68 00:03:39,280 --> 00:03:42,280 Speaker 1: family dwellings have won, and there's this boom. And if 69 00:03:42,320 --> 00:03:45,240 Speaker 1: you do a chart showing construction and multi family versu 70 00:03:45,280 --> 00:03:49,120 Speaker 1: construction and single family, single families totally slump, never got 71 00:03:49,160 --> 00:03:52,480 Speaker 1: even backed anywhere near like pre crisis levels, whereas multi 72 00:03:52,480 --> 00:03:55,440 Speaker 1: family just keeps booming. Is that a permanent figure could 73 00:03:55,520 --> 00:03:58,080 Speaker 1: like there be like this sort of like Minsky moment 74 00:03:58,560 --> 00:04:01,840 Speaker 1: for multi family in floor rental options where it's like 75 00:04:01,920 --> 00:04:04,160 Speaker 1: the lux suddenly runt right, and so much of the 76 00:04:04,200 --> 00:04:07,320 Speaker 1: market right now housing in general, so single family plus 77 00:04:07,400 --> 00:04:10,280 Speaker 1: multi family, so much of the outlook is predicated on 78 00:04:10,280 --> 00:04:13,120 Speaker 1: what you think is going to happen to supply and capacity. 79 00:04:13,240 --> 00:04:15,680 Speaker 1: So that is really a key question. Are the multi 80 00:04:15,680 --> 00:04:19,240 Speaker 1: family homes going to keep getting built? Well, let's talk 81 00:04:19,240 --> 00:04:21,640 Speaker 1: about it with someone who can answer all of these 82 00:04:21,720 --> 00:04:24,240 Speaker 1: questions for us. We're going to be speaking with Chris Salviati. 83 00:04:24,320 --> 00:04:28,440 Speaker 1: He is the senior Housing economist at Apartment List. He's 84 00:04:28,440 --> 00:04:30,680 Speaker 1: going to answer our questions. Chris, thank you so much 85 00:04:30,720 --> 00:04:32,800 Speaker 1: for coming on odd Lots. Hi thanks so much for 86 00:04:32,839 --> 00:04:35,920 Speaker 1: having me on. So Chris, can I ask my landlord 87 00:04:35,960 --> 00:04:38,320 Speaker 1: for a rent cut when in the next couple of months? Like, 88 00:04:38,440 --> 00:04:42,400 Speaker 1: is it is that reasonable? Well, I guess it depends 89 00:04:42,400 --> 00:04:44,279 Speaker 1: when you sign your least show. It sounds like you 90 00:04:44,440 --> 00:04:47,560 Speaker 1: got kind of one of those pandemic deals that you know, 91 00:04:47,600 --> 00:04:49,880 Speaker 1: particularly in New York City, that was one of the 92 00:04:49,920 --> 00:04:53,440 Speaker 1: markets where friends actually really sharply in that first year 93 00:04:53,480 --> 00:04:57,080 Speaker 1: of the pandemic. So we are really seeing the market 94 00:04:57,200 --> 00:04:59,640 Speaker 1: having turned a corner a little bit over these past 95 00:04:59,680 --> 00:05:03,599 Speaker 1: few Prices have been coming down for four straight months 96 00:05:03,640 --> 00:05:06,520 Speaker 1: now in our our national rent index. But you know, 97 00:05:06,800 --> 00:05:11,240 Speaker 1: if you're still paying that late level, then you might 98 00:05:11,279 --> 00:05:16,840 Speaker 1: not necessarily eligible for a discount that. So when we 99 00:05:16,920 --> 00:05:19,680 Speaker 1: say rents are going down, and I saw on your 100 00:05:19,680 --> 00:05:22,880 Speaker 1: Twitter feed, I think you have the national median rent 101 00:05:23,120 --> 00:05:27,880 Speaker 1: down now three from its August peak, what does that 102 00:05:27,920 --> 00:05:31,800 Speaker 1: actually mean? Like, how are we actually putting together a 103 00:05:31,960 --> 00:05:35,200 Speaker 1: national or you know, even a city rent price. And 104 00:05:35,480 --> 00:05:37,960 Speaker 1: I guess my question really is when when prices start 105 00:05:38,000 --> 00:05:41,239 Speaker 1: to move like that, how much of it is reflected 106 00:05:41,360 --> 00:05:44,839 Speaker 1: in the actual figures that people are paying for their apartments. 107 00:05:45,279 --> 00:05:48,840 Speaker 1: The way that we calculate our price index, it's basically 108 00:05:48,880 --> 00:05:52,280 Speaker 1: a repeat transaction index, and so we can see, you know, 109 00:05:52,400 --> 00:05:56,040 Speaker 1: on our platform, we're able to track individual units over time, 110 00:05:56,120 --> 00:05:58,760 Speaker 1: so we can see for all of the apartments that 111 00:05:58,800 --> 00:06:02,360 Speaker 1: we're listed on apartment List for rent this month and 112 00:06:02,480 --> 00:06:05,160 Speaker 1: that subsequently got rented, we can look back and see 113 00:06:05,400 --> 00:06:07,520 Speaker 1: when was the last time that that exact unit was 114 00:06:07,560 --> 00:06:10,960 Speaker 1: rented previously. Compare those two prices and see how much 115 00:06:11,040 --> 00:06:14,240 Speaker 1: that price changed for that individual unit, which really you know, 116 00:06:14,320 --> 00:06:18,720 Speaker 1: controls for sort of quality across the inventory, and then 117 00:06:18,760 --> 00:06:23,320 Speaker 1: we basically aggregate those up for the individual geography, whether 118 00:06:23,320 --> 00:06:26,440 Speaker 1: that be a city level or national level index. Uh. 119 00:06:26,440 --> 00:06:28,960 Speaker 1: And our national index is basically just an aggregation of 120 00:06:29,000 --> 00:06:32,000 Speaker 1: all the inventory that we see across the country. And 121 00:06:32,040 --> 00:06:34,320 Speaker 1: so that you know, three percent discount that we talked 122 00:06:34,320 --> 00:06:38,400 Speaker 1: about and starting from the August peak to present that 123 00:06:38,400 --> 00:06:41,520 Speaker 1: that should be reflective of what folks are seeing if 124 00:06:41,520 --> 00:06:43,400 Speaker 1: you're going out on the market and signing a new lease. 125 00:06:44,200 --> 00:06:46,760 Speaker 1: So as an economist, I mean, you know, I guess 126 00:06:46,760 --> 00:06:50,120 Speaker 1: like there's like, uh, the index construction as you described it, 127 00:06:50,200 --> 00:06:52,800 Speaker 1: I'm sure it's a you know, I'm sure that's a 128 00:06:52,839 --> 00:06:56,080 Speaker 1: pretty tricky technical challenge. And you know that we had 129 00:06:56,120 --> 00:06:59,599 Speaker 1: that conversation last year at Olmer Sharief. There's these coming 130 00:06:59,640 --> 00:07:02,520 Speaker 1: up with the price index is never trivial, even if 131 00:07:02,560 --> 00:07:05,880 Speaker 1: it's just like a sort of like repeat methodology. But 132 00:07:06,000 --> 00:07:12,080 Speaker 1: I'm curious, like, as an UH, from a modeling perspective, like, okay, 133 00:07:12,120 --> 00:07:14,760 Speaker 1: strength of the consumer, strength of the labor market has 134 00:07:14,800 --> 00:07:18,080 Speaker 1: got to be like one important factor. People are losing jobs, 135 00:07:18,400 --> 00:07:21,280 Speaker 1: people's wages are going down. There's like a got to 136 00:07:21,320 --> 00:07:24,520 Speaker 1: be a limit to how much rent price increase can 137 00:07:24,560 --> 00:07:28,000 Speaker 1: be sustained. What else goes into that supply Like, how 138 00:07:28,000 --> 00:07:30,480 Speaker 1: do you think about sort of like modeling a forecast 139 00:07:30,520 --> 00:07:32,760 Speaker 1: for the price of rent? Yeah, you know, I mean 140 00:07:32,800 --> 00:07:36,480 Speaker 1: I think in the highest level framework, it is, as 141 00:07:36,480 --> 00:07:39,560 Speaker 1: you said, kind of a demand and supply question. I 142 00:07:39,600 --> 00:07:43,160 Speaker 1: think when we talk about housing, you know, obviously the 143 00:07:43,280 --> 00:07:47,800 Speaker 1: supply response UH is a lot more prolonged than it 144 00:07:47,880 --> 00:07:49,640 Speaker 1: is maybe in some other markets. You know, it takes 145 00:07:49,640 --> 00:07:53,720 Speaker 1: a long time to permit and get construct new construction built, 146 00:07:53,760 --> 00:07:56,240 Speaker 1: and so in the shorter term, you know, I think 147 00:07:56,280 --> 00:07:59,000 Speaker 1: the kind of the big up and down swings that 148 00:07:59,040 --> 00:08:01,920 Speaker 1: we see are really driven by demand. And when we're 149 00:08:01,920 --> 00:08:05,440 Speaker 1: talking about demand here, it's really household formation. You know, 150 00:08:05,480 --> 00:08:08,000 Speaker 1: how many new people are striking out on their own 151 00:08:08,080 --> 00:08:11,360 Speaker 1: and forming new households. Uh. And obviously when we're talking 152 00:08:11,400 --> 00:08:15,520 Speaker 1: about the rental market in particular, there's also the dynamics 153 00:08:15,680 --> 00:08:20,360 Speaker 1: of how that household formation kind of interacts between the 154 00:08:20,360 --> 00:08:23,520 Speaker 1: for sale and the rental side of the market. So, uh, 155 00:08:23,560 --> 00:08:26,960 Speaker 1: you know, right now what we're seeing obviously sky high 156 00:08:26,960 --> 00:08:29,600 Speaker 1: mortgage rates, things are really difficult on the for sale 157 00:08:29,680 --> 00:08:32,600 Speaker 1: side as well, and so folks are staying in rental 158 00:08:32,679 --> 00:08:37,640 Speaker 1: units for longer. That creates lightness, but the overall household 159 00:08:37,640 --> 00:08:41,439 Speaker 1: formation numbers, you know, if we go back to that's 160 00:08:41,480 --> 00:08:44,440 Speaker 1: when that was really uh, you know, taking off, and 161 00:08:44,480 --> 00:08:47,120 Speaker 1: when we saw the really astronomical rent hikes over the 162 00:08:47,120 --> 00:08:50,120 Speaker 1: past year and particularly the past few months, that's really 163 00:08:50,160 --> 00:09:09,679 Speaker 1: started to slow down quite a bit. So one thing 164 00:09:09,679 --> 00:09:13,839 Speaker 1: I've always wondered our our rent hikes and rent decreases 165 00:09:14,040 --> 00:09:17,000 Speaker 1: sort of asymmetrical in the sense that rents tend to 166 00:09:17,040 --> 00:09:19,640 Speaker 1: go up a lot faster than they come down. This 167 00:09:19,720 --> 00:09:22,320 Speaker 1: is my you know, at the risk of risk of 168 00:09:22,880 --> 00:09:25,720 Speaker 1: being very biased here, but my personal experience with rent 169 00:09:26,200 --> 00:09:28,680 Speaker 1: is that it tends to go up and doesn't tend 170 00:09:28,720 --> 00:09:32,800 Speaker 1: to come down as much. Is that actually the case? Yeah, 171 00:09:33,000 --> 00:09:35,400 Speaker 1: you know what, when we looked at our rent index 172 00:09:35,520 --> 00:09:38,960 Speaker 1: over time, it's definitely the case that it tends to 173 00:09:38,960 --> 00:09:42,440 Speaker 1: to march upward rather than downward. We do see it 174 00:09:42,520 --> 00:09:45,000 Speaker 1: is typical to see a little bit of a decline 175 00:09:45,160 --> 00:09:48,360 Speaker 1: in the late fall and winter months. There's just a 176 00:09:48,360 --> 00:09:51,920 Speaker 1: pretty clear seasonal pattern to rent friends and fewer folks 177 00:09:51,960 --> 00:09:55,079 Speaker 1: move in the winter, so properties that do have vacancies 178 00:09:55,120 --> 00:09:58,240 Speaker 1: to fill will often offer modest discounts at that time 179 00:09:58,280 --> 00:10:01,680 Speaker 1: of year. But again, at is really just kind of 180 00:10:01,880 --> 00:10:06,360 Speaker 1: a temporary seasonal trend. And uh you know at UM, 181 00:10:06,960 --> 00:10:10,480 Speaker 1: once activity picks back up, rent growth tends to turn 182 00:10:10,600 --> 00:10:15,000 Speaker 1: positive again, and that positive growth almost always outweighs those 183 00:10:15,040 --> 00:10:18,920 Speaker 1: seasonal declines. You know, our our rent index goes back 184 00:10:18,960 --> 00:10:22,240 Speaker 1: to seventeen so we don't have a huge history, but 185 00:10:22,320 --> 00:10:25,600 Speaker 1: at least over those years, we've never seen a year 186 00:10:25,679 --> 00:10:29,560 Speaker 1: in which uh nominal rent growth has been negative. Even 187 00:10:29,600 --> 00:10:32,960 Speaker 1: if you go back to the aftermath of the Great 188 00:10:33,000 --> 00:10:36,080 Speaker 1: Recession and you look at rent cp I over that period, 189 00:10:36,160 --> 00:10:39,120 Speaker 1: you know, it was basically flat or we didn't really 190 00:10:39,160 --> 00:10:43,520 Speaker 1: see much of a nominal decline there either. So just 191 00:10:43,559 --> 00:10:46,160 Speaker 1: on this topic, I imagine that you must speak to 192 00:10:46,520 --> 00:10:51,559 Speaker 1: landlords on on a fairly regular basis. What's the decision 193 00:10:51,679 --> 00:10:54,959 Speaker 1: process for them, like when it comes to setting the rents, 194 00:10:55,040 --> 00:10:57,160 Speaker 1: Like what are they looking at? What are the different 195 00:10:57,280 --> 00:11:00,679 Speaker 1: factors that might go into them actually pulling the trigger 196 00:11:00,840 --> 00:11:04,600 Speaker 1: on either a substantial rent hike or some sort of decline. 197 00:11:05,240 --> 00:11:07,360 Speaker 1: You know, I should say, a lot of the inventory 198 00:11:07,480 --> 00:11:10,360 Speaker 1: that we have an apartment list in particular, and that 199 00:11:10,400 --> 00:11:13,040 Speaker 1: feeds into our r in in index. Uh, it does 200 00:11:13,160 --> 00:11:16,439 Speaker 1: tend to skew towards a particular segment of the market, 201 00:11:16,480 --> 00:11:20,880 Speaker 1: that being you know, the large professionally managed multifamily complexes. 202 00:11:20,920 --> 00:11:23,960 Speaker 1: So thinking here of you know, big apartment buildings that 203 00:11:23,960 --> 00:11:28,360 Speaker 1: that have fifty or more units, and so those professionally 204 00:11:28,360 --> 00:11:32,240 Speaker 1: managed buildings tend to be pretty sophisticated and how they 205 00:11:32,240 --> 00:11:37,000 Speaker 1: set prices. Uh, And actually there are price setting algorithms 206 00:11:37,040 --> 00:11:40,320 Speaker 1: softwares that kind of tend to come bundled along with 207 00:11:40,440 --> 00:11:43,840 Speaker 1: property management softwares, and so a lot of these properties 208 00:11:43,880 --> 00:11:46,720 Speaker 1: are are actually you know, using these kind of algorithmic 209 00:11:46,760 --> 00:11:51,040 Speaker 1: price setting techniques where you know, the software that they're 210 00:11:51,120 --> 00:11:55,439 Speaker 1: using is also uh kind of integrated with various other 211 00:11:55,480 --> 00:11:57,520 Speaker 1: properties throughout the market, and so they have a lot 212 00:11:57,559 --> 00:12:01,160 Speaker 1: of really good real time data, you know, those demand 213 00:12:01,240 --> 00:12:03,400 Speaker 1: changes as I see them in real time. And so 214 00:12:03,760 --> 00:12:05,800 Speaker 1: I think, you know, when we're talking about this professionally 215 00:12:05,800 --> 00:12:09,120 Speaker 1: managed segment, I think it can be pretty sophisticated. Obviously, 216 00:12:09,200 --> 00:12:10,920 Speaker 1: at the other end of the spectrum, you've got you know, 217 00:12:10,960 --> 00:12:13,600 Speaker 1: your your kind of mom and pop landlord's folks who 218 00:12:13,640 --> 00:12:16,920 Speaker 1: maybe only own a couple of rental units, and I 219 00:12:17,360 --> 00:12:20,480 Speaker 1: think that segment of the market maybe the considerations are 220 00:12:20,800 --> 00:12:24,080 Speaker 1: a little bit different, probably a little bit slower to 221 00:12:24,160 --> 00:12:28,920 Speaker 1: respond to those market changes, and also probably a greater 222 00:12:29,000 --> 00:12:33,240 Speaker 1: emphasis on just wanting to avoid vacancies and have intenants 223 00:12:33,240 --> 00:12:34,800 Speaker 1: that will be there for a long time. So it 224 00:12:34,880 --> 00:12:36,760 Speaker 1: definitely varies based on, you know, the part of the 225 00:12:36,760 --> 00:12:39,520 Speaker 1: market that you're talking about actually wanted to bring. I mean, 226 00:12:39,720 --> 00:12:41,920 Speaker 1: it's sort of getting a little bit away from the macro, 227 00:12:42,160 --> 00:12:45,440 Speaker 1: but that's fine, you know, Like it's always seems to 228 00:12:45,480 --> 00:12:48,280 Speaker 1: me when I think about this question, which is that 229 00:12:48,840 --> 00:12:53,400 Speaker 1: if you have a a tenant who is both um 230 00:12:53,800 --> 00:12:58,000 Speaker 1: good at like regularly paying their bills, is not regularly late, 231 00:12:58,080 --> 00:12:59,640 Speaker 1: has never had an issue where they need to be 232 00:13:00,040 --> 00:13:02,280 Speaker 1: did or something. It seems like there must be like 233 00:13:02,320 --> 00:13:04,800 Speaker 1: a pretty big risk in pricing them out because a 234 00:13:05,440 --> 00:13:09,000 Speaker 1: like it doesn't take very long of a vacant apartment. 235 00:13:09,120 --> 00:13:11,160 Speaker 1: It would seem to me it wouldn't take very long 236 00:13:11,400 --> 00:13:13,120 Speaker 1: to lose a lot of the games you would get 237 00:13:13,120 --> 00:13:14,880 Speaker 1: from the rent pricing crease. So if you have like 238 00:13:14,920 --> 00:13:17,720 Speaker 1: a month vacancy, that's a lot of lost money. And 239 00:13:17,760 --> 00:13:19,720 Speaker 1: then there's the wild card of like, okay, then you 240 00:13:19,800 --> 00:13:21,840 Speaker 1: fill it. But what if the person who comes in 241 00:13:22,080 --> 00:13:24,040 Speaker 1: is like not great about paying the rent, They're gonna 242 00:13:24,240 --> 00:13:27,600 Speaker 1: damage the place. And so I'm curious like whether some 243 00:13:27,640 --> 00:13:30,440 Speaker 1: of the software these pricing decisions like take it to 244 00:13:30,520 --> 00:13:34,640 Speaker 1: account about like existing tenant quality and the potential like 245 00:13:34,800 --> 00:13:37,280 Speaker 1: cost of losing them. Yeah, you know, that's a great 246 00:13:37,360 --> 00:13:41,320 Speaker 1: question as far as kind of the the algorithmic portion 247 00:13:41,400 --> 00:13:44,439 Speaker 1: of it. You know, those are sort of proprietary algorithms, 248 00:13:44,480 --> 00:13:45,960 Speaker 1: and you know there's not something that you know, we 249 00:13:46,000 --> 00:13:48,600 Speaker 1: had apartment lists, we don't have kind of version of that. 250 00:13:48,679 --> 00:13:52,080 Speaker 1: So I don't actually have a good sense of whether 251 00:13:52,160 --> 00:13:54,080 Speaker 1: or not you know, this dynamic that we're talking about 252 00:13:54,080 --> 00:13:56,000 Speaker 1: as far as kind of kind of quality, I'm not 253 00:13:56,040 --> 00:13:59,400 Speaker 1: sure exactly how that kind of factors into those algorithmic 254 00:13:59,440 --> 00:14:01,559 Speaker 1: price setting, but as you said, you know, I think 255 00:14:01,559 --> 00:14:05,719 Speaker 1: this is definitely uh unimportant variable. I think in particular, 256 00:14:05,800 --> 00:14:08,080 Speaker 1: like I said, when we're referring to the kind of 257 00:14:08,080 --> 00:14:12,640 Speaker 1: the mom and pop segments of the of the rental space, 258 00:14:12,760 --> 00:14:16,040 Speaker 1: I think that's probably you know, factoring a lot more 259 00:14:16,080 --> 00:14:19,600 Speaker 1: heavily into their decision making if you've got you know, 260 00:14:19,640 --> 00:14:23,600 Speaker 1: if you're if you're a big property owner that has 261 00:14:23,800 --> 00:14:27,440 Speaker 1: hundreds of units and you lose you know, one good 262 00:14:27,440 --> 00:14:30,360 Speaker 1: tenant and have a vacancy that maybe sits for a 263 00:14:30,400 --> 00:14:33,320 Speaker 1: few months, that's not going to really affect the bottom 264 00:14:33,360 --> 00:14:35,640 Speaker 1: line as much as if you have you know, a 265 00:14:35,640 --> 00:14:38,320 Speaker 1: single duplex and and one of your tenants leaves and 266 00:14:38,400 --> 00:14:41,080 Speaker 1: you have a vacancy for months or have a bad 267 00:14:41,120 --> 00:14:43,880 Speaker 1: experience with a tenant. And so I think that's also why, 268 00:14:44,120 --> 00:14:46,080 Speaker 1: you know, maybe prices tend to be a little bit 269 00:14:46,080 --> 00:14:50,600 Speaker 1: stickier for in those kind of smaller rental properties as well. 270 00:14:50,640 --> 00:14:52,720 Speaker 1: You know, if those mom and pop landlords do get 271 00:14:52,760 --> 00:14:54,880 Speaker 1: a good tenant in I think they want to keep 272 00:14:54,920 --> 00:14:57,200 Speaker 1: that person there as long as possible, and so maybe 273 00:14:57,240 --> 00:15:00,720 Speaker 1: they're a little bit more hesitant to um to really 274 00:15:00,880 --> 00:15:03,320 Speaker 1: raise prices. Sing that again we Tracy, I just want 275 00:15:03,360 --> 00:15:09,239 Speaker 1: to point out I really like my landlord. She's very attentive, 276 00:15:09,400 --> 00:15:12,440 Speaker 1: with a very good relationship. So even though I started 277 00:15:12,440 --> 00:15:15,200 Speaker 1: the episode saying I was anxious, if she is listening 278 00:15:15,680 --> 00:15:19,800 Speaker 1: to this, I hope she hears that I really enjoy 279 00:15:19,880 --> 00:15:24,080 Speaker 1: where we live and I really enjoy our the landlord, 280 00:15:24,120 --> 00:15:30,960 Speaker 1: she should factor your consistency into her pricing algorithm. Yes, yes, exactly, excellent, Okay, Chris, 281 00:15:31,080 --> 00:15:33,720 Speaker 1: just on this topic, I mean, I do find this fascinating. 282 00:15:33,720 --> 00:15:36,880 Speaker 1: So let me ask about this in a slightly different way, 283 00:15:36,920 --> 00:15:40,560 Speaker 1: which is, over the past few years, given the rise 284 00:15:40,640 --> 00:15:44,200 Speaker 1: of some of these algorithmic pricing services, given also the 285 00:15:44,360 --> 00:15:46,960 Speaker 1: rise of the number of big landlords who seem to 286 00:15:46,960 --> 00:15:49,920 Speaker 1: be moving into the multifamily space or becoming a bigger 287 00:15:50,000 --> 00:15:54,680 Speaker 1: part of that space, do you see an impact on prices? So, 288 00:15:54,720 --> 00:15:57,800 Speaker 1: for instance, are they more volatile, more reactive than they 289 00:15:57,960 --> 00:16:00,080 Speaker 1: used to be when we maybe had a run a 290 00:16:00,240 --> 00:16:03,720 Speaker 1: landscape that was more about small, mom and pop landlords. 291 00:16:04,680 --> 00:16:06,920 Speaker 1: That definitely could be the case that we're seeing a 292 00:16:06,960 --> 00:16:10,240 Speaker 1: little bit more of volatility, kind of bigger swings in 293 00:16:10,520 --> 00:16:14,600 Speaker 1: either direction in rent prices. I think one one kind 294 00:16:14,600 --> 00:16:16,760 Speaker 1: of piece of evidence that's maybe kind of interesting and 295 00:16:16,800 --> 00:16:20,280 Speaker 1: relevant here. Um, the Cleveland Fed actually put out a 296 00:16:20,320 --> 00:16:24,840 Speaker 1: really interesting working paper recently where they dugged into you know, 297 00:16:24,960 --> 00:16:28,000 Speaker 1: you mentioned kind of briefly that this difference between the 298 00:16:28,000 --> 00:16:30,760 Speaker 1: trends that you would see in our rent indexperts what's 299 00:16:30,760 --> 00:16:35,080 Speaker 1: happening in the official CPI measures, uh, and so this 300 00:16:35,160 --> 00:16:38,920 Speaker 1: paper was really meant to kind of like disentangle those differences. 301 00:16:39,000 --> 00:16:42,880 Speaker 1: And so what they did was essentially take the underlying 302 00:16:42,920 --> 00:16:47,120 Speaker 1: micro data that feeds into the official CPI estimates and 303 00:16:47,240 --> 00:16:51,240 Speaker 1: reconstructed an alternate index. That's you're using a methodology similar 304 00:16:51,280 --> 00:16:54,840 Speaker 1: to how apartment List and other kind of private sector 305 00:16:54,960 --> 00:16:58,640 Speaker 1: sources calculate our rent indexes, so essentially looking at you know, 306 00:16:58,760 --> 00:17:01,680 Speaker 1: rather than all households, looking at only new tenants, and 307 00:17:01,800 --> 00:17:05,160 Speaker 1: using kind of a repeat rent methodology similar to ours. 308 00:17:05,880 --> 00:17:10,440 Speaker 1: And so what that found was basically that this kind 309 00:17:10,440 --> 00:17:14,520 Speaker 1: of new index that they constructed, uh follows a very 310 00:17:14,520 --> 00:17:17,439 Speaker 1: similar trend to what we see in our index, but 311 00:17:17,840 --> 00:17:20,560 Speaker 1: the swings are a little bit less extreme, And I 312 00:17:20,600 --> 00:17:25,280 Speaker 1: do think that probably this comes down to the difference 313 00:17:25,320 --> 00:17:27,879 Speaker 1: in sample. As I said, you know, the apartmentless index 314 00:17:27,960 --> 00:17:32,960 Speaker 1: is heavily skewed towards this large, professionally managed segment of 315 00:17:33,000 --> 00:17:36,280 Speaker 1: the market, whereas the l S data is designed to 316 00:17:36,320 --> 00:17:38,960 Speaker 1: be representative of the market as a whole. And so 317 00:17:39,359 --> 00:17:43,719 Speaker 1: that kind of suggests to me that we are seeing, 318 00:17:43,760 --> 00:17:46,320 Speaker 1: you know, a bit of kind of what you described, 319 00:17:46,440 --> 00:17:50,360 Speaker 1: that these uh, that a large professionally managed buildings are 320 00:17:50,400 --> 00:17:53,360 Speaker 1: going to be a little bit more reactive in their pricing, 321 00:17:53,520 --> 00:17:56,560 Speaker 1: and that those uh, those swings, as I said, you know, 322 00:17:56,600 --> 00:17:59,119 Speaker 1: when when rents are going up, they might go up 323 00:17:59,119 --> 00:18:01,320 Speaker 1: a little bit quicker when they're going down with that 324 00:18:01,359 --> 00:18:04,359 Speaker 1: seasonal trend, those those winter tips might be a little 325 00:18:04,359 --> 00:18:07,159 Speaker 1: bit more pronounced as well. Um, you know it is 326 00:18:07,200 --> 00:18:09,040 Speaker 1: it could also be the case that there is maybe 327 00:18:09,080 --> 00:18:13,439 Speaker 1: just different demand dynamics happening at different segments of the market. 328 00:18:13,480 --> 00:18:15,480 Speaker 1: So this might not all come down to just that 329 00:18:15,600 --> 00:18:19,040 Speaker 1: kind of algorithmic pricing alone, but I do think it's 330 00:18:19,040 --> 00:18:22,200 Speaker 1: certainly a factor there. Well, let's talk a little bit 331 00:18:22,240 --> 00:18:26,800 Speaker 1: more about the picture right now and what's happening, because 332 00:18:27,040 --> 00:18:29,560 Speaker 1: so we've had we had this huge rent boom. Everyone 333 00:18:29,600 --> 00:18:33,000 Speaker 1: knows the price of rent surge, especially basically all the measures, 334 00:18:33,000 --> 00:18:36,480 Speaker 1: private measures, public measures, etcetera. Everything went up a lot. 335 00:18:36,680 --> 00:18:38,520 Speaker 1: But it seems like there are a number of factors 336 00:18:38,600 --> 00:18:40,280 Speaker 1: now that and we've touched on some of them that 337 00:18:40,320 --> 00:18:44,159 Speaker 1: are reversing. So the labor market is slowing, wage growth 338 00:18:44,280 --> 00:18:46,800 Speaker 1: is slowing, new job creation is not what it was 339 00:18:47,000 --> 00:18:51,200 Speaker 1: a year ago. Household formation, as you mentioned that ship 340 00:18:51,359 --> 00:18:54,959 Speaker 1: that boomed, and now there's already some talk about like, okay, 341 00:18:54,960 --> 00:18:57,639 Speaker 1: well maybe like people are getting roommates again, which as 342 00:18:57,680 --> 00:18:59,720 Speaker 1: we talked about I think it was with them James 343 00:18:59,760 --> 00:19:02,800 Speaker 1: E in the dats A factor and shrinking household formation. 344 00:19:02,840 --> 00:19:05,520 Speaker 1: I didn't understand all these terms until just a few 345 00:19:05,560 --> 00:19:07,440 Speaker 1: months ago when we talked about that. But so that's 346 00:19:07,440 --> 00:19:10,920 Speaker 1: shrinking household formation and then you know, and talked about 347 00:19:10,920 --> 00:19:14,760 Speaker 1: it in the intro the the part the multi family 348 00:19:14,800 --> 00:19:18,800 Speaker 1: industry just like booming, and those those construction numbers haven't 349 00:19:18,800 --> 00:19:20,840 Speaker 1: really don't seem to have slowed down at all yet. 350 00:19:21,160 --> 00:19:23,439 Speaker 1: And so like, how much of like a sort of 351 00:19:23,480 --> 00:19:26,639 Speaker 1: like confluence of factors could there be or how unusual 352 00:19:26,760 --> 00:19:29,440 Speaker 1: the situation could be where there's a number of potential 353 00:19:29,520 --> 00:19:33,240 Speaker 1: drivers of reduced demand, and at the same time the 354 00:19:33,320 --> 00:19:35,919 Speaker 1: supply creation has been off the charts, Like, what do 355 00:19:35,960 --> 00:19:41,159 Speaker 1: you see happening with this combo of drivers. Yeah, you know, 356 00:19:41,240 --> 00:19:44,840 Speaker 1: as I said, we've been seeing already that our national 357 00:19:44,840 --> 00:19:48,080 Speaker 1: rent index has been declining for the past four months. 358 00:19:48,080 --> 00:19:49,919 Speaker 1: You know, as I said, that all in and of 359 00:19:49,960 --> 00:19:53,760 Speaker 1: itself isn't necessarily a typical but the decline that we've 360 00:19:53,800 --> 00:19:58,200 Speaker 1: been seeing recently has been notably sharper than than the 361 00:19:58,280 --> 00:20:01,399 Speaker 1: usual seasonal trend. And so it seem like like some 362 00:20:01,480 --> 00:20:05,240 Speaker 1: of these factors are finally kind of colliding and coming 363 00:20:05,280 --> 00:20:08,000 Speaker 1: to fruition in a way that's really resulting in a 364 00:20:08,000 --> 00:20:10,320 Speaker 1: big shift in the market. And I do think, you know, 365 00:20:10,800 --> 00:20:13,160 Speaker 1: it's really kind of the things that you just laid 366 00:20:13,160 --> 00:20:15,720 Speaker 1: out there. On the demand side, things really are cooling 367 00:20:15,720 --> 00:20:19,320 Speaker 1: down quite a bit obviously, you know, after a year 368 00:20:19,560 --> 00:20:24,000 Speaker 1: plus of extreme skyrocketing grunt growth as well as just 369 00:20:24,119 --> 00:20:27,680 Speaker 1: broad based inflation eating way at non housing budgets, folks 370 00:20:27,720 --> 00:20:29,760 Speaker 1: are finding that their budgets just aren't going as far, 371 00:20:29,840 --> 00:20:32,480 Speaker 1: and so fewer folks are able to afford to strike 372 00:20:32,480 --> 00:20:35,199 Speaker 1: out on their own. Also with you know, kind of 373 00:20:35,320 --> 00:20:37,600 Speaker 1: as you said, kind of a cooling labor market where 374 00:20:37,640 --> 00:20:41,159 Speaker 1: session fears even people that maybe could currently afford to 375 00:20:41,160 --> 00:20:44,439 Speaker 1: strike out there on their own are possibly delaying those moves, 376 00:20:44,600 --> 00:20:49,040 Speaker 1: And so demand has really cooled down significantly. And on 377 00:20:49,080 --> 00:20:52,120 Speaker 1: the supply side, we are seeing really, as you said, 378 00:20:52,160 --> 00:20:56,200 Speaker 1: a historic boom there. We've got right now more multifamily 379 00:20:56,280 --> 00:21:00,000 Speaker 1: units under construction that than at any point since nineteen seven. 380 00:21:00,560 --> 00:21:02,960 Speaker 1: A lot of that supply is expected to hit the market, 381 00:21:04,640 --> 00:21:07,159 Speaker 1: and so I do think that, you know, we we 382 00:21:07,200 --> 00:21:12,040 Speaker 1: aren't necessarily expecting to see a prolonged slide in rents, 383 00:21:12,080 --> 00:21:15,080 Speaker 1: but I think these days of you know, extreme brain 384 00:21:15,160 --> 00:21:18,760 Speaker 1: froth are definitely behind us. Why is that construction boom 385 00:21:19,000 --> 00:21:22,639 Speaker 1: happening because for the past few years you would have expected, 386 00:21:23,240 --> 00:21:25,440 Speaker 1: I mean, we talk a lot about on the show 387 00:21:25,480 --> 00:21:29,040 Speaker 1: about supply chain issues how that impacted housing. You saw 388 00:21:29,040 --> 00:21:33,400 Speaker 1: the big gap between single family housing starts and completions 389 00:21:33,520 --> 00:21:37,280 Speaker 1: supposedly because of a lot of supply chain issues. At 390 00:21:37,280 --> 00:21:41,040 Speaker 1: a minimum, you would have expected some big multi family 391 00:21:41,400 --> 00:21:45,240 Speaker 1: builders or investors to have a more uncertain outlook for 392 00:21:45,280 --> 00:21:47,520 Speaker 1: the past two or three years. But that doesn't seem 393 00:21:47,560 --> 00:21:51,000 Speaker 1: to have translated into any sort of construction slowdown. So 394 00:21:51,040 --> 00:21:53,879 Speaker 1: why is that? You know, I think despite kind of 395 00:21:53,880 --> 00:21:56,320 Speaker 1: the factors that you mentioned, the the outlook for multi 396 00:21:56,359 --> 00:22:01,680 Speaker 1: family has continued to remain pretty strong. And I think 397 00:22:01,760 --> 00:22:04,679 Speaker 1: even as we talk about the market slowing down a 398 00:22:04,720 --> 00:22:08,119 Speaker 1: little bit over these past few months, that's still a 399 00:22:08,240 --> 00:22:11,480 Speaker 1: very minor decline when we think about it relative to 400 00:22:11,520 --> 00:22:13,880 Speaker 1: what's happened over the past couple of years. So prices 401 00:22:14,400 --> 00:22:18,920 Speaker 1: down three from the August peak, but still up compared 402 00:22:18,960 --> 00:22:22,359 Speaker 1: to their marks level. And so you know, we have 403 00:22:22,800 --> 00:22:26,280 Speaker 1: really seen that, uh that brand prices are continuing to 404 00:22:26,320 --> 00:22:29,399 Speaker 1: go up, and over the long run, we are seeing 405 00:22:29,960 --> 00:22:33,760 Speaker 1: strong demand and and so I think, uh that is 406 00:22:34,880 --> 00:22:37,400 Speaker 1: creating kind of you know, maintaining sort of a positive 407 00:22:37,520 --> 00:22:41,639 Speaker 1: outlook for the multi family industry. And uh, can I 408 00:22:41,760 --> 00:22:44,119 Speaker 1: and you know, can I ask this question in a 409 00:22:44,200 --> 00:22:46,840 Speaker 1: slightly different way, like what is the bowl case for 410 00:22:46,880 --> 00:22:50,560 Speaker 1: a multi family here? Like why like what gives these 411 00:22:50,560 --> 00:22:54,840 Speaker 1: big investors the confidence to keep building um at the 412 00:22:54,920 --> 00:22:58,760 Speaker 1: rate that we've seen recently? Yeah? So, I mean, I 413 00:22:58,800 --> 00:23:03,360 Speaker 1: think when we just look kind of holistically, it's definitely 414 00:23:03,359 --> 00:23:07,639 Speaker 1: the case that the US housing market is still undersupplied. 415 00:23:07,680 --> 00:23:10,560 Speaker 1: You know that there are kind of various estimates out 416 00:23:10,560 --> 00:23:15,280 Speaker 1: there on on how big that gap is. But Freddie Mack, 417 00:23:15,359 --> 00:23:18,960 Speaker 1: for example, estimates that were have a shortage about four 418 00:23:19,000 --> 00:23:22,560 Speaker 1: million housing units right now, and uh, you know, we 419 00:23:22,560 --> 00:23:25,199 Speaker 1: we are still seeing kind of more and more of 420 00:23:26,280 --> 00:23:29,760 Speaker 1: you know, obviously millennials are the largest generation, but Gen 421 00:23:29,880 --> 00:23:32,440 Speaker 1: Z is also a large generation that's continuing to come 422 00:23:32,480 --> 00:23:36,920 Speaker 1: of age and to form their own households, and there 423 00:23:37,080 --> 00:23:39,600 Speaker 1: is still a lot of pent up demand there I 424 00:23:39,600 --> 00:23:42,960 Speaker 1: think in terms of uh, you know, new household formation 425 00:23:42,960 --> 00:23:46,360 Speaker 1: that we could see going forward. And so I think 426 00:23:46,400 --> 00:23:52,480 Speaker 1: that's really uh kind of them I say, macro level. 427 00:23:52,520 --> 00:23:55,119 Speaker 1: I guess that would be kind of the broad picture. 428 00:23:55,160 --> 00:23:58,120 Speaker 1: I think a lot of this also varies geographically as well. 429 00:23:58,760 --> 00:24:01,800 Speaker 1: A lot of this contruction is happening in Sun Belt markets, 430 00:24:01,800 --> 00:24:04,720 Speaker 1: and in those markets in particular have been continuing to 431 00:24:04,800 --> 00:24:07,520 Speaker 1: draw release really strong demand. Yeah. I was just gonna 432 00:24:07,560 --> 00:24:10,320 Speaker 1: ask actually that question, because you can like point on 433 00:24:10,480 --> 00:24:14,600 Speaker 1: a chart to production of new apartments going up. But 434 00:24:14,640 --> 00:24:17,280 Speaker 1: of course isn't not really a commodity because you know, 435 00:24:17,400 --> 00:24:21,200 Speaker 1: new apartments being built in Nashville or Dallas don't help 436 00:24:21,240 --> 00:24:23,560 Speaker 1: me as a renter in New York City. Can you 437 00:24:23,600 --> 00:24:27,080 Speaker 1: talk a little bit more about the geographical distribution of 438 00:24:27,080 --> 00:24:30,040 Speaker 1: where this new supply is coming out. As I said, 439 00:24:30,080 --> 00:24:33,680 Speaker 1: a lot of this is coming in in the sundult markets. 440 00:24:33,760 --> 00:24:37,080 Speaker 1: So when we look at you know, new permitting activity 441 00:24:37,240 --> 00:24:40,680 Speaker 1: per capita, so how many new housing units are being 442 00:24:40,760 --> 00:24:45,040 Speaker 1: permitted as a proportion of the existing number of housing 443 00:24:45,080 --> 00:24:48,560 Speaker 1: units in a given market, Austin is far and away 444 00:24:48,640 --> 00:24:51,720 Speaker 1: the leader there, but they really, you know, the ones 445 00:24:52,200 --> 00:24:54,560 Speaker 1: that are seeing kind of the most permitting activity are 446 00:24:55,000 --> 00:24:59,240 Speaker 1: really a lot of those Texas markets, Florida Market, Phoenix, 447 00:25:00,240 --> 00:25:03,520 Speaker 1: in the big coastal you know, superstar cities, and contrast 448 00:25:03,640 --> 00:25:07,120 Speaker 1: places like New York, San Francisco, Boston. We're we're really 449 00:25:07,160 --> 00:25:10,480 Speaker 1: not seeing that same level of activity. And so the 450 00:25:10,800 --> 00:25:13,760 Speaker 1: markets that you know are kind of the nation's most 451 00:25:13,760 --> 00:25:17,199 Speaker 1: expensive ones, the ones that have been under supplied for 452 00:25:17,240 --> 00:25:19,760 Speaker 1: so long, we are continuing to see that be a 453 00:25:19,760 --> 00:25:25,199 Speaker 1: problem where uh they are still under building. Um just 454 00:25:25,320 --> 00:25:28,679 Speaker 1: in in terms of I guess the factors and motivations 455 00:25:28,720 --> 00:25:31,840 Speaker 1: that drive apartment construction. Can you talk to us a 456 00:25:31,880 --> 00:25:35,920 Speaker 1: little bit about financing, Like what is a typical financing 457 00:25:36,000 --> 00:25:39,520 Speaker 1: structure if I want to build a big, you know, 458 00:25:39,600 --> 00:25:42,200 Speaker 1: apartment building of some sort do I take out, you know, 459 00:25:42,320 --> 00:25:44,760 Speaker 1: a floating rate loan or am I so big that 460 00:25:44,840 --> 00:25:47,439 Speaker 1: maybe I'm issuing my own bonds? Like how does that 461 00:25:47,480 --> 00:25:51,720 Speaker 1: actually work? You know, that's a great question that isn't 462 00:25:51,840 --> 00:25:57,000 Speaker 1: necessarily my particular area of expertise. I don't have kind 463 00:25:57,000 --> 00:25:59,840 Speaker 1: of the concrete details there, but you know, I will 464 00:26:00,000 --> 00:26:02,879 Speaker 1: say that when we talk about kind of single family 465 00:26:02,880 --> 00:26:07,280 Speaker 1: of our multi family constructed and obviously single family has 466 00:26:07,320 --> 00:26:11,320 Speaker 1: slowed down quite a bit recently, and that is in 467 00:26:11,520 --> 00:26:15,919 Speaker 1: response to sort of rising interest rates obviously hit mortgages 468 00:26:16,000 --> 00:26:18,760 Speaker 1: as well, and so the rising interest rates really hit 469 00:26:18,880 --> 00:26:20,800 Speaker 1: demand on the single family side in a way that 470 00:26:20,840 --> 00:26:25,680 Speaker 1: they don't on the multi family side. Family project, yeah, yeah, yeah, 471 00:26:25,680 --> 00:26:27,800 Speaker 1: and multi family projects, I would also say, are just 472 00:26:27,880 --> 00:26:33,240 Speaker 1: kind of bigger and more complex, and our endeavors unfold 473 00:26:33,240 --> 00:26:35,280 Speaker 1: over a longer period of time, and so maybe a 474 00:26:35,280 --> 00:26:38,600 Speaker 1: little bit less reacted to those kind of short term 475 00:26:38,600 --> 00:26:57,439 Speaker 1: fluctuations in the market. I want to go back to, 476 00:26:57,520 --> 00:27:00,639 Speaker 1: you know, we talked about household formation or maybe I 477 00:27:00,640 --> 00:27:04,480 Speaker 1: don't know, household deformation lately, and maybe people get roommates again, 478 00:27:04,520 --> 00:27:07,600 Speaker 1: they're feeling a little less confident another like sort of 479 00:27:07,640 --> 00:27:11,159 Speaker 1: maybe it's like medium term trend, and it seems like 480 00:27:11,280 --> 00:27:13,800 Speaker 1: during the pandemic we did start to see a bit 481 00:27:13,840 --> 00:27:17,720 Speaker 1: of a millennial baby boom. And my understanding and so 482 00:27:17,760 --> 00:27:20,000 Speaker 1: I guess when people have kids, they're like, well, maybe 483 00:27:20,000 --> 00:27:22,359 Speaker 1: we'll move out of the city, move out of a 484 00:27:22,440 --> 00:27:26,040 Speaker 1: multi family there's actually already have a second question. But 485 00:27:26,080 --> 00:27:28,679 Speaker 1: the first question is like how does that factor into it? 486 00:27:28,720 --> 00:27:31,080 Speaker 1: And again, you know, we're talking about SAT in the beginning, 487 00:27:31,119 --> 00:27:34,000 Speaker 1: like all these things have been going in good for 488 00:27:34,119 --> 00:27:38,240 Speaker 1: multi family developers. Could this be like a meaningful, like 489 00:27:38,440 --> 00:27:41,600 Speaker 1: medium term setback if there's some sort of structural shift 490 00:27:41,640 --> 00:27:45,360 Speaker 1: among millennials, pretty huge generation right now, and which actually, 491 00:27:45,640 --> 00:27:47,480 Speaker 1: you know what, we thought we were cool, but in 492 00:27:47,520 --> 00:27:49,399 Speaker 1: the end we ended up boring like everyone else and 493 00:27:49,400 --> 00:27:53,119 Speaker 1: we moved out to the suburbs. Yeah, definitely, you know, 494 00:27:53,359 --> 00:27:56,160 Speaker 1: I think that is actually something that we've already been 495 00:27:56,200 --> 00:27:58,639 Speaker 1: seeing play out in our data. Is that kind of 496 00:27:58,680 --> 00:28:03,479 Speaker 1: shift a a from the downtown areas and and towards 497 00:28:03,560 --> 00:28:06,359 Speaker 1: the suburbs to a certain extent, when we look at 498 00:28:06,400 --> 00:28:09,919 Speaker 1: our rent data and and break that out by you know, 499 00:28:09,960 --> 00:28:13,439 Speaker 1: the core cities of major metros first they're surrounding stuburbs 500 00:28:13,720 --> 00:28:16,760 Speaker 1: We've actually found that since the start of the pandemic, 501 00:28:17,119 --> 00:28:20,639 Speaker 1: rent growth has been notably faster in uh in the 502 00:28:20,640 --> 00:28:23,560 Speaker 1: suburbs of big metros as compared to the core cities. 503 00:28:23,800 --> 00:28:26,080 Speaker 1: Uh So, I think some of this, you know, is 504 00:28:26,560 --> 00:28:31,359 Speaker 1: maybe due to just changing preferences because of the pandemic itself, folks, 505 00:28:31,400 --> 00:28:34,160 Speaker 1: you know, maybe not feeling as safe in the early 506 00:28:34,160 --> 00:28:36,760 Speaker 1: phases of the pandemic being in a dense urban environment, 507 00:28:36,880 --> 00:28:39,720 Speaker 1: wanting to to space out a little bit more remote 508 00:28:39,720 --> 00:28:42,400 Speaker 1: work is also a factor here. But as you said, 509 00:28:42,440 --> 00:28:45,680 Speaker 1: I think, you know, the millennial generation is now aging 510 00:28:45,680 --> 00:28:49,760 Speaker 1: into this phase of of wanting to settle down and 511 00:28:50,000 --> 00:28:53,640 Speaker 1: start families and uh and so you know, I think 512 00:28:53,640 --> 00:28:55,640 Speaker 1: we can we definitely are starting to see some of 513 00:28:55,640 --> 00:28:58,920 Speaker 1: those shifts already start to play out. I have another question, 514 00:28:58,960 --> 00:29:01,800 Speaker 1: which is, like, so, I have two kids, but unlike 515 00:29:01,920 --> 00:29:04,720 Speaker 1: other people, I actually am cool and I don't want 516 00:29:04,720 --> 00:29:07,000 Speaker 1: to move to the suburbs. Like this episode is just 517 00:29:07,120 --> 00:29:10,720 Speaker 1: Joe taking like advice on handling his rent. No, this 518 00:29:10,480 --> 00:29:12,560 Speaker 1: is this is a this is gonna be a gripe. 519 00:29:12,720 --> 00:29:14,240 Speaker 1: This is this is a grape. Like I don't want 520 00:29:14,240 --> 00:29:16,680 Speaker 1: to move to the suburbs. I like living in Manhattan. 521 00:29:16,880 --> 00:29:18,840 Speaker 1: They've being said, you know, every once in a while, 522 00:29:18,880 --> 00:29:21,200 Speaker 1: and we look like new developments and they're like, oh, 523 00:29:21,280 --> 00:29:23,000 Speaker 1: really cool, and they have like a pool room and 524 00:29:23,040 --> 00:29:25,400 Speaker 1: they have like a doorman, which is all stuff I've 525 00:29:25,440 --> 00:29:29,080 Speaker 1: never had before. They're like terrible for families, and they 526 00:29:29,120 --> 00:29:32,080 Speaker 1: don't none of these buildings have like you know, like 527 00:29:32,120 --> 00:29:34,200 Speaker 1: they'll like call the two bedroom and the second bedroom 528 00:29:34,200 --> 00:29:36,320 Speaker 1: will like be a closet, like really and then like 529 00:29:36,840 --> 00:29:39,160 Speaker 1: god forbid, like a third bedroom or something like never 530 00:29:39,480 --> 00:29:42,080 Speaker 1: you never find it. Why is it that like all 531 00:29:42,160 --> 00:29:44,160 Speaker 1: of this new development that they see, like none of 532 00:29:44,160 --> 00:29:46,920 Speaker 1: it seems like suitable for people with kids. That's a 533 00:29:46,960 --> 00:29:49,880 Speaker 1: good question too. I think, you know, it has been 534 00:29:49,920 --> 00:29:53,520 Speaker 1: the case that historically we do see these kind of 535 00:29:53,520 --> 00:29:56,360 Speaker 1: shifts that you know, as folks kind of age into 536 00:29:56,480 --> 00:29:59,960 Speaker 1: that phase of life of settling down and having kids. 537 00:30:00,000 --> 00:30:02,760 Speaker 1: You know, that has been a pretty predictable pattern that 538 00:30:02,840 --> 00:30:06,040 Speaker 1: you know, the majority of folks move out of the 539 00:30:06,120 --> 00:30:09,680 Speaker 1: city and towards the suburbs. And so I think historically 540 00:30:09,720 --> 00:30:12,640 Speaker 1: maybe that that that demand just hasn't necessarily been there 541 00:30:12,680 --> 00:30:14,680 Speaker 1: as much. But I do think that you know, we 542 00:30:14,720 --> 00:30:18,000 Speaker 1: are also seeing that, as I said, we've been seeing 543 00:30:18,000 --> 00:30:20,520 Speaker 1: some of these kind of shifts out of the city, 544 00:30:20,720 --> 00:30:23,560 Speaker 1: but I do think that we are have also seen 545 00:30:23,600 --> 00:30:26,200 Speaker 1: that millennials have kind of different preferences as well, and 546 00:30:26,240 --> 00:30:30,480 Speaker 1: probably have a little bit more of a desire for 547 00:30:30,520 --> 00:30:35,840 Speaker 1: those urban amenities than potentially prior generations, and so I 548 00:30:36,240 --> 00:30:39,680 Speaker 1: think hopefully that will be something where, uh, the supply 549 00:30:39,800 --> 00:30:41,720 Speaker 1: side starts to to come around and maybe cater to 550 00:30:41,720 --> 00:30:43,480 Speaker 1: that segment of the market a little bit more. But 551 00:30:43,880 --> 00:30:46,480 Speaker 1: historically I think maybe that that just hasn't necessarily been 552 00:30:46,480 --> 00:30:49,600 Speaker 1: the case as much, and so potentially property is kind 553 00:30:49,600 --> 00:30:52,080 Speaker 1: of working on a little bit of an outdated model 554 00:30:52,280 --> 00:30:55,960 Speaker 1: potentially on on what folks are desiring. Let me ask 555 00:30:56,000 --> 00:30:59,520 Speaker 1: a really basic, simple question that we probably should have 556 00:30:59,520 --> 00:31:01,840 Speaker 1: asked at the are the beginning, but how low could 557 00:31:01,840 --> 00:31:06,320 Speaker 1: rents go from here? What's the outlook? So I think, 558 00:31:06,360 --> 00:31:09,040 Speaker 1: you know, our our base case for this year is 559 00:31:09,080 --> 00:31:13,440 Speaker 1: that we're not really expecting to see a decline for 560 00:31:13,680 --> 00:31:18,240 Speaker 1: full year three, We're probably expecting to see very modest 561 00:31:18,360 --> 00:31:22,280 Speaker 1: positive rent growth, maybe a couple of percentage points. But 562 00:31:23,760 --> 00:31:26,840 Speaker 1: I think there is the possibility that rents could continue 563 00:31:26,880 --> 00:31:30,640 Speaker 1: to slide, particularly if we do enter a recession. This year, 564 00:31:30,680 --> 00:31:34,280 Speaker 1: if the labor market continues to weaken, and uh, you know, 565 00:31:34,720 --> 00:31:38,040 Speaker 1: we do enter a phase where there's possibly a contraction 566 00:31:38,080 --> 00:31:40,160 Speaker 1: in household that that may be reversed as some of 567 00:31:40,200 --> 00:31:44,520 Speaker 1: this household formation that's happened in recent years. There's certainly, uh, 568 00:31:44,880 --> 00:31:48,200 Speaker 1: there is certainly the possibility that rents could continue to 569 00:31:48,240 --> 00:31:51,560 Speaker 1: trend downward. Uh. As I said, that's not really the 570 00:31:51,800 --> 00:31:54,400 Speaker 1: base case that I'm working with right now. And even 571 00:31:54,440 --> 00:31:57,280 Speaker 1: if rents were to continue sliding in you know, that 572 00:31:57,440 --> 00:32:01,800 Speaker 1: downside scenario where potentially we enter session, I don't think 573 00:32:01,800 --> 00:32:05,920 Speaker 1: we're talking about declines anywhere near the magnitude that would 574 00:32:06,080 --> 00:32:10,080 Speaker 1: reverse the increases that we saw in Say what's the 575 00:32:10,120 --> 00:32:14,800 Speaker 1: biggest wild card or the most important factor in that outlook? Like, 576 00:32:14,920 --> 00:32:18,360 Speaker 1: what would give you reason to pause and say, actually, 577 00:32:18,440 --> 00:32:21,240 Speaker 1: maybe maybe things could go in a different direction. Is 578 00:32:21,240 --> 00:32:23,520 Speaker 1: it something like, you know, if there's a recession, an 579 00:32:23,560 --> 00:32:28,360 Speaker 1: unemployment picks up, or something like if if capacity suddenly 580 00:32:28,520 --> 00:32:31,880 Speaker 1: booms even more Like, what is what is that that 581 00:32:32,040 --> 00:32:35,640 Speaker 1: pressure point for that look? I would say it really 582 00:32:35,960 --> 00:32:38,479 Speaker 1: is probably just what's happening in the in the broader 583 00:32:38,520 --> 00:32:42,600 Speaker 1: macro environment and the labor market in particular, as I said, 584 00:32:42,640 --> 00:32:45,400 Speaker 1: you know, we we've got kind of record number of 585 00:32:45,520 --> 00:32:48,960 Speaker 1: new units in the construction pipeline. So the supply side 586 00:32:49,000 --> 00:32:51,520 Speaker 1: of it seems pretty clear that we are going to 587 00:32:51,560 --> 00:32:54,680 Speaker 1: get a lot of new supply coming online this year, 588 00:32:54,920 --> 00:32:56,880 Speaker 1: and I think the demand side is going to be 589 00:32:56,880 --> 00:33:00,320 Speaker 1: a little bit more of an X factor, uh as 590 00:33:00,600 --> 00:33:03,040 Speaker 1: you know, as as we've looked at these past few 591 00:33:03,080 --> 00:33:07,280 Speaker 1: months of economic data, obviously inflation has already started to 592 00:33:07,320 --> 00:33:11,160 Speaker 1: come down. There's maybe uh some some frightening signs that 593 00:33:11,240 --> 00:33:14,120 Speaker 1: potentially the FED can achieve, you know, this soft landing 594 00:33:14,120 --> 00:33:16,880 Speaker 1: that they've been talking about. But at the same time, 595 00:33:16,960 --> 00:33:19,040 Speaker 1: you know, there is still this sort of recession risk 596 00:33:19,120 --> 00:33:22,040 Speaker 1: and consumer sentiment you can have it if it's rebounded 597 00:33:22,080 --> 00:33:25,040 Speaker 1: a little bit, is still uh not great. And so 598 00:33:25,120 --> 00:33:28,800 Speaker 1: I think that really is uh you know, probably probably 599 00:33:28,840 --> 00:33:30,920 Speaker 1: the biggest thing that I'll be keeping an eye on. 600 00:33:31,120 --> 00:33:33,760 Speaker 1: If if the labor market continues to weaken and we 601 00:33:33,800 --> 00:33:37,120 Speaker 1: see tightened unemployment, then that's definitely something that we would 602 00:33:37,120 --> 00:33:40,640 Speaker 1: expect to impact the demand side of the equation, uh, 603 00:33:40,840 --> 00:33:42,720 Speaker 1: and that that would maybe be the case where rents 604 00:33:42,720 --> 00:33:44,920 Speaker 1: continue to slide. You know, I just want to actually 605 00:33:45,000 --> 00:33:49,360 Speaker 1: go back to the recent decline and uh in historical context, 606 00:33:49,440 --> 00:33:51,880 Speaker 1: because you said, right, you know, it's not that weird 607 00:33:51,960 --> 00:33:54,480 Speaker 1: to get a few of these soft months. The most 608 00:33:54,600 --> 00:33:57,440 Speaker 1: recent prints do seem to be a little bit more 609 00:33:57,520 --> 00:34:01,320 Speaker 1: on the unusual, unseasoned side. What are some past comparisons, Like, 610 00:34:01,360 --> 00:34:03,600 Speaker 1: what are we talking about in terms of like what 611 00:34:03,760 --> 00:34:09,640 Speaker 1: prior downturns looked like if at the end of you're like, wow, 612 00:34:09,800 --> 00:34:11,719 Speaker 1: this really did turn out to be a very different year. 613 00:34:11,880 --> 00:34:13,279 Speaker 1: Is a bad year? Like what are we talking about 614 00:34:13,320 --> 00:34:15,680 Speaker 1: in terms of like magnitude and how far do you 615 00:34:15,719 --> 00:34:18,040 Speaker 1: have to like go back before in time to like 616 00:34:18,360 --> 00:34:21,799 Speaker 1: see uh, to understand this context. As I said, you know, 617 00:34:21,800 --> 00:34:24,920 Speaker 1: when we when we talk about the recent declines August three, 618 00:34:24,960 --> 00:34:29,440 Speaker 1: December down three percent, Uh, the past three months of 619 00:34:29,480 --> 00:34:31,719 Speaker 1: rent declines are actually you know, in the history of 620 00:34:31,719 --> 00:34:33,920 Speaker 1: our index, which like I said, we're going back to 621 00:34:34,280 --> 00:34:38,360 Speaker 1: seventeen here. Uh, those these past three months October, November, December, 622 00:34:38,440 --> 00:34:41,680 Speaker 1: those are the three sharpest declines in the history of 623 00:34:41,760 --> 00:34:45,439 Speaker 1: our National rent Index for comparison. You know, that three 624 00:34:45,440 --> 00:34:48,480 Speaker 1: percent to client that we've seen over these past few 625 00:34:48,520 --> 00:34:51,960 Speaker 1: months is in comparison to say a more you know, 626 00:34:52,280 --> 00:34:57,160 Speaker 1: normal year of nineteen we were seeing a decline of 627 00:34:57,200 --> 00:35:00,359 Speaker 1: maybe one and a half percent over over that same 628 00:35:00,400 --> 00:35:03,759 Speaker 1: stretch of months, And so definitely you know, sharper right 629 00:35:03,800 --> 00:35:07,640 Speaker 1: now than what we've typically seen as far as you 630 00:35:07,680 --> 00:35:10,520 Speaker 1: know what happens in kind of times of of of 631 00:35:10,640 --> 00:35:14,080 Speaker 1: sort of broader economic down terms. Uh, you know, we 632 00:35:14,120 --> 00:35:16,960 Speaker 1: don't really have the the longer history in our index 633 00:35:17,000 --> 00:35:19,200 Speaker 1: to be able to to give the direct comparison there. 634 00:35:19,239 --> 00:35:21,359 Speaker 1: But as I said, you know, if you look at 635 00:35:21,400 --> 00:35:24,640 Speaker 1: just rent cp I, obviously that's a little bit of 636 00:35:24,680 --> 00:35:27,799 Speaker 1: a different measure than than our index. But even in 637 00:35:27,840 --> 00:35:31,879 Speaker 1: the aftermath of the two eight recession, there wasn't really 638 00:35:31,960 --> 00:35:35,160 Speaker 1: a significant decline there. It was basically just flat for 639 00:35:35,200 --> 00:35:37,000 Speaker 1: a couple of years. So you know, at least in 640 00:35:37,120 --> 00:35:40,600 Speaker 1: nominal terms, we weren't seeing prices come down by a 641 00:35:40,600 --> 00:35:44,239 Speaker 1: significant amount. Again, because of the differences in how it's 642 00:35:44,280 --> 00:35:47,520 Speaker 1: tracked and cp I versus our index, we we probably 643 00:35:47,600 --> 00:35:50,200 Speaker 1: were talking about a little bit of a decline in 644 00:35:50,200 --> 00:35:54,440 Speaker 1: in in new lease prices, um, but I think you know, 645 00:35:54,520 --> 00:35:57,759 Speaker 1: to to answer questions in terms of magnitudes of you know, 646 00:35:57,920 --> 00:36:01,000 Speaker 1: how much could things come down? I think even in 647 00:36:01,000 --> 00:36:04,560 Speaker 1: that that downside scenario, if you know if we were 648 00:36:04,680 --> 00:36:08,120 Speaker 1: to enter a recession on the national level, you know, 649 00:36:08,239 --> 00:36:12,000 Speaker 1: maybe five percent, I would say ten percent would be 650 00:36:12,040 --> 00:36:15,640 Speaker 1: would feel pretty extraordinary to me. Um. Obviously, again, this 651 00:36:15,760 --> 00:36:18,600 Speaker 1: is something that varies market by market, so some markets 652 00:36:18,640 --> 00:36:22,040 Speaker 1: could could definitely see sharper declines. It's really the fact 653 00:36:22,080 --> 00:36:25,480 Speaker 1: that great the Great Financial Crisis, that rents didn't actually 654 00:36:25,520 --> 00:36:28,120 Speaker 1: they just stalled, but they didn't even plunge. That kind 655 00:36:28,120 --> 00:36:30,520 Speaker 1: of makes me believe that they sort of like, you know, 656 00:36:30,600 --> 00:36:33,600 Speaker 1: every episode we've done for years, like lessons from the Crisis, 657 00:36:33,680 --> 00:36:36,160 Speaker 1: right in some way in the lesson for multi family 658 00:36:36,200 --> 00:36:38,560 Speaker 1: from the Crisis, that it never goes down, which kind 659 00:36:38,600 --> 00:36:40,799 Speaker 1: of makes me believe that that's sort of like one 660 00:36:40,880 --> 00:36:44,120 Speaker 1: day that Minskew moment hard landing could come from for 661 00:36:44,160 --> 00:36:48,600 Speaker 1: the industry anyway. Chris Salviati, economist at Department List, thank 662 00:36:48,640 --> 00:36:51,279 Speaker 1: you so much for coming on Odd Lots, helping us 663 00:36:51,320 --> 00:36:54,400 Speaker 1: to finally address the topic that we should have probably 664 00:36:54,480 --> 00:36:56,800 Speaker 1: touched on a long time. Thanks so much for having me. 665 00:36:56,840 --> 00:37:11,920 Speaker 1: It was a lot of fun. Tracy, I just want 666 00:37:12,000 --> 00:37:14,279 Speaker 1: to start off by reiterating that I have a very 667 00:37:14,400 --> 00:37:18,160 Speaker 1: good landlord. She is very responsive in their issues in 668 00:37:18,200 --> 00:37:23,280 Speaker 1: the apartment with appliances, etcetera, and that I hope she's listening, 669 00:37:23,360 --> 00:37:28,840 Speaker 1: and how much we appreciate her responsiveness, and yeah, anyway, 670 00:37:29,040 --> 00:37:30,279 Speaker 1: I just want to get that out of the way again. 671 00:37:30,320 --> 00:37:33,120 Speaker 1: The fact that you keep addressing your landlord, who may 672 00:37:33,200 --> 00:37:35,200 Speaker 1: or may not listen to this episode makes me think 673 00:37:35,239 --> 00:37:37,640 Speaker 1: that actually, maybe the landlord has a decent amount of 674 00:37:37,640 --> 00:37:40,360 Speaker 1: pricing power here. And the more you say it, the 675 00:37:40,440 --> 00:37:42,880 Speaker 1: more she's going to realize that You're right. I'm like 676 00:37:42,960 --> 00:37:45,880 Speaker 1: totally backing myself into a corner by I'm showing my 677 00:37:45,960 --> 00:37:47,640 Speaker 1: hand how much we want to stay in the unit. 678 00:37:47,800 --> 00:37:49,880 Speaker 1: You should be like, I don't care. I like moving whatever, 679 00:37:50,000 --> 00:37:54,240 Speaker 1: I likeaucracy, all of these all of these new buildings 680 00:37:54,280 --> 00:37:56,880 Speaker 1: have great amenities that I can use. No, but I 681 00:37:57,320 --> 00:38:00,400 Speaker 1: do think, I mean the My major take from that 682 00:38:00,480 --> 00:38:03,200 Speaker 1: discussion is that it's good to be a landlord, and 683 00:38:03,280 --> 00:38:05,719 Speaker 1: it seems good to be a multi family landlord. There 684 00:38:05,800 --> 00:38:07,799 Speaker 1: is a big question mark that you kept alluding to 685 00:38:07,920 --> 00:38:10,799 Speaker 1: about whether or not at some point the boom and 686 00:38:11,120 --> 00:38:15,680 Speaker 1: the expansion um, the supply side expansion, whether or not 687 00:38:15,800 --> 00:38:20,960 Speaker 1: that will come home to roost. But it seems I 688 00:38:21,000 --> 00:38:24,200 Speaker 1: don't know, like given the structural lack of housing in 689 00:38:24,239 --> 00:38:26,440 Speaker 1: the US, it seems like we're a long way off 690 00:38:26,480 --> 00:38:29,560 Speaker 1: from that. I'll tweet out the chart when this episode 691 00:38:29,640 --> 00:38:31,440 Speaker 1: comes out so people know. But like we have this 692 00:38:31,520 --> 00:38:36,680 Speaker 1: index US US multi family unit started for rent, and 693 00:38:36,800 --> 00:38:41,040 Speaker 1: it's just so far above pre Great Financial Crisis. I mean, 694 00:38:41,080 --> 00:38:44,440 Speaker 1: it's way above pre COVID levels, pre Financial crisis. The 695 00:38:44,560 --> 00:38:47,120 Speaker 1: last time it was this high, at least on this index, 696 00:38:47,160 --> 00:38:50,040 Speaker 1: looks like it was like six. So I mean, this 697 00:38:50,160 --> 00:38:52,880 Speaker 1: is just like an industry that just wins, wins, wins, winds. 698 00:38:52,920 --> 00:38:55,360 Speaker 1: But I do think, you know, like again, I do 699 00:38:55,440 --> 00:38:58,400 Speaker 1: remember we probably read, maybe even wrote, like some stories 700 00:38:58,440 --> 00:39:02,040 Speaker 1: like well millennials be scar on owning homes forever and 701 00:39:02,280 --> 00:39:05,359 Speaker 1: two thousand ten and that was a popular thing. And now, 702 00:39:05,760 --> 00:39:08,000 Speaker 1: like you know, everyone got boring and they had kids 703 00:39:08,000 --> 00:39:09,600 Speaker 1: and they moved out to the suburbs and they bought 704 00:39:09,640 --> 00:39:12,080 Speaker 1: a house if they could. And so I do wonder, 705 00:39:12,160 --> 00:39:14,640 Speaker 1: I do like buy this idea, like maybe like maybe 706 00:39:14,680 --> 00:39:16,920 Speaker 1: some some big shift is going to happen. You know 707 00:39:16,960 --> 00:39:20,120 Speaker 1: what's interesting if you chart that line multi family units 708 00:39:20,160 --> 00:39:23,880 Speaker 1: started for rent versus multi family units started for sale, 709 00:39:24,640 --> 00:39:29,279 Speaker 1: it's two very different directions. So for sale ones just 710 00:39:29,360 --> 00:39:32,400 Speaker 1: plunges and the for rent one just keeps going up. 711 00:39:32,560 --> 00:39:35,120 Speaker 1: Oh that's a great shore, you know. Yeah, yes, we 712 00:39:35,120 --> 00:39:38,120 Speaker 1: should definitely write that, not just tweet about it. Yeah, no, 713 00:39:38,239 --> 00:39:40,200 Speaker 1: you're right. Wow, I never looked at this, and okay, 714 00:39:40,200 --> 00:39:43,600 Speaker 1: there's plenty of um. The other thing that's surpribably, can 715 00:39:43,640 --> 00:39:45,960 Speaker 1: I just say, actually before you know, it's interesting and 716 00:39:46,000 --> 00:39:48,560 Speaker 1: I don't know if this chart exists, but I think 717 00:39:48,600 --> 00:39:51,400 Speaker 1: the flip side is that there has been an increase 718 00:39:51,760 --> 00:39:55,040 Speaker 1: in single family units for rent, which is not a 719 00:39:55,120 --> 00:39:57,799 Speaker 1: category of housing that gets a lot of discussion, but 720 00:39:58,000 --> 00:40:01,640 Speaker 1: it is a growing sector of like single family household units, 721 00:40:01,640 --> 00:40:04,280 Speaker 1: but for the rental market anyway, I think that actually 722 00:40:04,960 --> 00:40:07,760 Speaker 1: is a that's some interesting stuff here to explore further, 723 00:40:08,000 --> 00:40:10,279 Speaker 1: for sure. And you know the other thing that surprises 724 00:40:10,280 --> 00:40:12,839 Speaker 1: me about that whole episode, Yes, we managed to get 725 00:40:12,920 --> 00:40:15,680 Speaker 1: through it without once saying that the rent is too 726 00:40:15,760 --> 00:40:17,960 Speaker 1: damn high, which I thought one of us was for sure, 727 00:40:18,600 --> 00:40:20,319 Speaker 1: for sure gonna bring you just took care of that 728 00:40:20,400 --> 00:40:22,279 Speaker 1: for us. Yeah, okay, I did it. Shall we leave 729 00:40:22,320 --> 00:40:24,399 Speaker 1: it there, Let's leave it there. Okay. This has been 730 00:40:24,440 --> 00:40:27,440 Speaker 1: another episode of the Odd Thoughts podcast. I'm Tracy Alloway. 731 00:40:27,520 --> 00:40:29,960 Speaker 1: You can follow me on Twitter at Tracy Alloway and 732 00:40:30,000 --> 00:40:32,160 Speaker 1: I'm Joe Why Isn't All? You can follow me on 733 00:40:32,200 --> 00:40:36,000 Speaker 1: Twitter at The Stalwart. Follow our guest Chris Salviati. He's 734 00:40:36,160 --> 00:40:40,919 Speaker 1: at Chris Underscore Salviati. Follow our producers Kerman Rodriguez at 735 00:40:41,000 --> 00:40:44,480 Speaker 1: Kerman Arman and Dash Bennett at Dashbot. And check out 736 00:40:44,480 --> 00:40:48,240 Speaker 1: all of our podcasts at Bloomberg under the handle at podcasts. 737 00:40:48,440 --> 00:40:51,759 Speaker 1: And for more odd Lots content, go to Bloomberg dot 738 00:40:51,760 --> 00:40:55,160 Speaker 1: com slash odd Lots, where we post transcripts Tracy and 739 00:40:55,280 --> 00:40:57,920 Speaker 1: Tracy and I blog. We have a weekly newsletter that 740 00:40:57,960 --> 00:41:00,360 Speaker 1: comes out every Friday. Go there, give us your email 741 00:41:00,640 --> 00:41:02,560 Speaker 1: sign up for it. Thanks for listening.