The "Big Shift" That's Finally Causing Rents to Fall

you know, yeah, pretty good rent. I'm not. I'm worried that at some point, like the cut, my landlord will perceive that like there's a gap between what we're paying and what the market prices are, and that my rent bill is going to shoot up. Well, i got a not very good deal on a rental post pandemic last year, and I've already gotten my one year, um like rench renewal notice and it was an automatic five percent pay increase,

which kind of sucks. Yeah that's not great. But wait, you did you did negotiate with them a little bit? I did. I said, I said, is there any way we could compromise on the rent, to which their response was, uh, they k not seventy five dollars off of their used off their proposed hikes. I'm saving myself seventy five dollars a month, which relative to the counterfeits I am. I am grateful for the gesture. However, relative to um the substantial New York rent, um, it's not it's not that much.

I tried, so we know that, Like, all right, So obviously rent is really important for all kinds of reasons. It's another one of these highly salient prices that people pay. It's a huge component of the inflation measures. What we know about the measures of rent seemed to be two things. One is various private sector measures seemed to have been turning down for a while. That's clear, And it also seems like um uh, it's only a matter of time before that feeds into the official measures that the Fed

likes to look at. We had a good episode last year with Sharif talking about why there's that gap and how to think about reconciled these two measures. But like, how far is it going to come down? Will there'll be a year in which our rent doesn't go up at all? Well, other people and other parts of the country seat rent. This is like a huge topic We've never actually done like a pure rent episode as far

as I know, No, we haven't. And there are all these interesting little things you can start to pick out of the topic. So, for instance, you know, in New York, maybe rents are starting to come down now, but not nearly as quickly as in other parts of the country. New York is a big part of rent c P I right, and so if New York prices stay sticky, it could have an overall effect on on national rent prices.

And also I'm I'm interested in talking also about some of the big picture developments that we have seen in the space. You know, people talk a lot about private equity moving into multy family housing, whether or not that's pushing up prices, uh, the impact to new technology as well on how landlords actually come up with the prices

that they charge people for their buildings. Lots to talk about. Well, you know, and we did talk about this recently with Connerson, who I thought made a really fascinating point, which is that like the rent apartment rent specifically multi family housing, it just has gone from strength to strength over the last like fifteen years. You know, It's like after the Great Financial Crisis, no one's gonna want to own a home anymore. Let's rent um millennials don't want to live

in the suburbs. Let's move to the city and rent millennials are delaying having kids, let's you know, no reason to you know more rent. Like at every turn, multi family dwellings have won, and there's this boom. And if you do a chart showing construction and multi family versu construction and single family, single families totally slump, never got even backed anywhere near like pre crisis levels, whereas multi

family just keeps booming. Is that a permanent figure could like there be like this sort of like Minsky moment for multi family in floor rental options where it's like the lux suddenly runt right, and so much of the market right now housing in general, so single family plus multi family, so much of the outlook is predicated on what you think is going to happen to supply and capacity. So that is really a key question. Are the multi

family homes going to keep getting built? Well, let's talk about it with someone who can answer all of these questions for us. We're going to be speaking with Chris Salviati. He is the senior Housing economist at Apartment List. He's going to answer our questions. Chris, thank you so much for coming on odd Lots. Hi thanks so much for having me on. So Chris, can I ask my landlord for a rent cut when in the next couple of months? Like, is it is that reasonable? Well, I guess it depends

when you sign your least show. It sounds like you got kind of one of those pandemic deals that you know, particularly in New York City, that was one of the markets where friends actually really sharply in that first year of the pandemic. So we are really seeing the market having turned a corner a little bit over these past few Prices have been coming down for four straight months now in our our national rent index. But you know, if you're still paying that late level, then you might

not necessarily eligible for a discount that. So when we say rents are going down, and I saw on your Twitter feed, I think you have the national median rent down now three from its August peak, what does that actually mean? Like, how are we actually putting together a national or you know, even a city rent price. And I guess my question really is when when prices start to move like that, how much of it is reflected in the actual figures that people are paying for their apartments.

The way that we calculate our price index, it's basically a repeat transaction index, and so we can see, you know, on our platform, we're able to track individual units over time, so we can see for all of the apartments that we're listed on apartment List for rent this month and that subsequently got rented, we can look back and see when was the last time that that exact unit was

rented previously. Compare those two prices and see how much that price changed for that individual unit, which really you know, controls for sort of quality across the inventory, and then we basically aggregate those up for the individual geography, whether that be a city level or national level index. Uh. And our national index is basically just an aggregation of

all the inventory that we see across the country. And so that you know, three percent discount that we talked about and starting from the August peak to present that that should be reflective of what folks are seeing if you're going out on the market and signing a new lease. So as an economist, I mean, you know, I guess like there's like, uh, the index construction as you described it, I'm sure it's a you know, I'm sure that's a pretty tricky technical challenge. And you know that we had

that conversation last year at Olmer Sharief. There's these coming up with the price index is never trivial, even if it's just like a sort of like repeat methodology. But I'm curious, like, as an UH, from a modeling perspective, like, okay, strength of the consumer, strength of the labor market has got to be like one important factor. People are losing jobs, people's wages are going down. There's like a got to be a limit to how much rent price increase can

be sustained. What else goes into that supply Like, how do you think about sort of like modeling a forecast for the price of rent? Yeah, you know, I mean I think in the highest level framework, it is, as you said, kind of a demand and supply question. I think when we talk about housing, you know, obviously the supply response UH is a lot more prolonged than it

is maybe in some other markets. You know, it takes a long time to permit and get construct new construction built, and so in the shorter term, you know, I think the kind of the big up and down swings that we see are really driven by demand. And when we're talking about demand here, it's really household formation. You know, how many new people are striking out on their own

and forming new households. Uh. And obviously when we're talking about the rental market in particular, there's also the dynamics of how that household formation kind of interacts between the for sale and the rental side of the market. So, uh, you know, right now what we're seeing obviously sky high mortgage rates, things are really difficult on the for sale side as well, and so folks are staying in rental

units for longer. That creates lightness, but the overall household formation numbers, you know, if we go back to that's when that was really uh, you know, taking off, and when we saw the really astronomical rent hikes over the past year and particularly the past few months, that's really started to slow down quite a bit. So one thing I've always wondered our our rent hikes and rent decreases sort of asymmetrical in the sense that rents tend to

go up a lot faster than they come down. This is my you know, at the risk of risk of being very biased here, but my personal experience with rent is that it tends to go up and doesn't tend to come down as much. Is that actually the case? Yeah, you know what, when we looked at our rent index over time, it's definitely the case that it tends to to march upward rather than downward. We do see it is typical to see a little bit of a decline

in the late fall and winter months. There's just a pretty clear seasonal pattern to rent friends and fewer folks move in the winter, so properties that do have vacancies to fill will often offer modest discounts at that time of year. But again, at is really just kind of a temporary seasonal trend. And uh you know at UM, once activity picks back up, rent growth tends to turn positive again, and that positive growth almost always outweighs those

seasonal declines. You know, our our rent index goes back to seventeen so we don't have a huge history, but at least over those years, we've never seen a year in which uh nominal rent growth has been negative. Even if you go back to the aftermath of the Great Recession and you look at rent cp I over that period, you know, it was basically flat or we didn't really see much of a nominal decline there either. So just on this topic, I imagine that you must speak to

landlords on on a fairly regular basis. What's the decision process for them, like when it comes to setting the rents, Like what are they looking at? What are the different factors that might go into them actually pulling the trigger on either a substantial rent hike or some sort of decline. You know, I should say, a lot of the inventory that we have an apartment list in particular, and that

feeds into our r in in index. Uh, it does tend to skew towards a particular segment of the market, that being you know, the large professionally managed multifamily complexes. So thinking here of you know, big apartment buildings that that have fifty or more units, and so those professionally managed buildings tend to be pretty sophisticated and how they

set prices. Uh, And actually there are price setting algorithms softwares that kind of tend to come bundled along with property management softwares, and so a lot of these properties are are actually you know, using these kind of algorithmic price setting techniques where you know, the software that they're using is also uh kind of integrated with various other properties throughout the market, and so they have a lot of really good real time data, you know, those demand

changes as I see them in real time. And so I think, you know, when we're talking about this professionally

managed segment, I think it can be pretty sophisticated. Obviously, at the other end of the spectrum, you've got you know, your your kind of mom and pop landlord's folks who maybe only own a couple of rental units, and I think that segment of the market maybe the considerations are a little bit different, probably a little bit slower to respond to those market changes, and also probably a greater emphasis on just wanting to avoid vacancies and have intenants

that will be there for a long time. So it definitely varies based on, you know, the part of the market that you're talking about actually wanted to bring. I mean, it's sort of getting a little bit away from the macro, but that's fine, you know, Like it's always seems to me when I think about this question, which is that if you have a a tenant who is both um good at like regularly paying their bills, is not regularly late, has never had an issue where they need to be

did or something. It seems like there must be like a pretty big risk in pricing them out because a like it doesn't take very long of a vacant apartment. It would seem to me it wouldn't take very long to lose a lot of the games you would get from the rent pricing crease. So if you have like a month vacancy, that's a lot of lost money. And then there's the wild card of like, okay, then you fill it. But what if the person who comes in is like not great about paying the rent, They're gonna

damage the place. And so I'm curious like whether some of the software these pricing decisions like take it to account about like existing tenant quality and the potential like cost of losing them. Yeah, you know, that's a great question as far as kind of the the algorithmic portion of it. You know, those are sort of proprietary algorithms, and you know there's not something that you know, we had apartment lists, we don't have kind of version of that.

So I don't actually have a good sense of whether or not you know, this dynamic that we're talking about as far as kind of kind of quality, I'm not sure exactly how that kind of factors into those algorithmic price setting, but as you said, you know, I think

this is definitely uh unimportant variable. I think in particular, like I said, when we're referring to the kind of the mom and pop segments of the of the rental space, I think that's probably you know, factoring a lot more heavily into their decision making if you've got you know, if you're if you're a big property owner that has hundreds of units and you lose you know, one good tenant and have a vacancy that maybe sits for a few months, that's not going to really affect the bottom

line as much as if you have you know, a single duplex and and one of your tenants leaves and you have a vacancy for months or have a bad experience with a tenant. And so I think that's also why, you know, maybe prices tend to be a little bit stickier for in those kind of smaller rental properties as well. You know, if those mom and pop landlords do get a good tenant in I think they want to keep that person there as long as possible, and so maybe they're a little bit more hesitant to um to really

raise prices. Sing that again we Tracy, I just want to point out I really like my landlord. She's very attentive, with a very good relationship. So even though I started the episode saying I was anxious, if she is listening to this, I hope she hears that I really enjoy where we live and I really enjoy our the landlord, she should factor your consistency into her pricing algorithm. Yes, yes, exactly, excellent, Okay, Chris, just on this topic, I mean, I do find this fascinating.

So let me ask about this in a slightly different way, which is, over the past few years, given the rise of some of these algorithmic pricing services, given also the rise of the number of big landlords who seem to be moving into the multifamily space or becoming a bigger part of that space, do you see an impact on prices? So, for instance, are they more volatile, more reactive than they used to be when we maybe had a run a landscape that was more about small, mom and pop landlords.

That definitely could be the case that we're seeing a little bit more of volatility, kind of bigger swings in either direction in rent prices. I think one one kind of piece of evidence that's maybe kind of interesting and

relevant here. Um, the Cleveland Fed actually put out a really interesting working paper recently where they dugged into you know, you mentioned kind of briefly that this difference between the trends that you would see in our rent indexperts what's happening in the official CPI measures, uh, and so this paper was really meant to kind of like disentangle those differences. And so what they did was essentially take the underlying micro data that feeds into the official CPI estimates and

reconstructed an alternate index. That's you're using a methodology similar to how apartment List and other kind of private sector sources calculate our rent indexes, so essentially looking at you know, rather than all households, looking at only new tenants, and using kind of a repeat rent methodology similar to ours.

And so what that found was basically that this kind of new index that they constructed, uh follows a very similar trend to what we see in our index, but the swings are a little bit less extreme, And I do think that probably this comes down to the difference in sample. As I said, you know, the apartmentless index is heavily skewed towards this large, professionally managed segment of the market, whereas the l S data is designed to

be representative of the market as a whole. And so that kind of suggests to me that we are seeing, you know, a bit of kind of what you described, that these uh, that a large professionally managed buildings are going to be a little bit more reactive in their pricing, and that those uh, those swings, as I said, you know, when when rents are going up, they might go up a little bit quicker when they're going down with that seasonal trend, those those winter tips might be a little

bit more pronounced as well. Um, you know it is it could also be the case that there is maybe just different demand dynamics happening at different segments of the market. So this might not all come down to just that kind of algorithmic pricing alone, but I do think it's certainly a factor there. Well, let's talk a little bit more about the picture right now and what's happening, because

so we've had we had this huge rent boom. Everyone knows the price of rent surge, especially basically all the measures, private measures, public measures, etcetera. Everything went up a lot. But it seems like there are a number of factors now that and we've touched on some of them that are reversing. So the labor market is slowing, wage growth is slowing, new job creation is not what it was

a year ago. Household formation, as you mentioned that ship that boomed, and now there's already some talk about like, okay, well maybe like people are getting roommates again, which as we talked about I think it was with them James E in the dats A factor and shrinking household formation. I didn't understand all these terms until just a few

months ago when we talked about that. But so that's shrinking household formation and then you know, and talked about it in the intro the the part the multi family industry just like booming, and those those construction numbers haven't really don't seem to have slowed down at all yet.

And so like, how much of like a sort of like confluence of factors could there be or how unusual the situation could be where there's a number of potential drivers of reduced demand, and at the same time the supply creation has been off the charts, Like, what do you see happening with this combo of drivers. Yeah, you know, as I said, we've been seeing already that our national rent index has been declining for the past four months.

You know, as I said, that all in and of itself isn't necessarily a typical but the decline that we've been seeing recently has been notably sharper than than the usual seasonal trend. And so it seem like like some of these factors are finally kind of colliding and coming to fruition in a way that's really resulting in a big shift in the market. And I do think, you know, it's really kind of the things that you just laid

out there. On the demand side, things really are cooling down quite a bit obviously, you know, after a year plus of extreme skyrocketing grunt growth as well as just broad based inflation eating way at non housing budgets, folks are finding that their budgets just aren't going as far, and so fewer folks are able to afford to strike

out on their own. Also with you know, kind of as you said, kind of a cooling labor market where session fears even people that maybe could currently afford to strike out there on their own are possibly delaying those moves, And so demand has really cooled down significantly. And on the supply side, we are seeing really, as you said, a historic boom there. We've got right now more multifamily units under construction that than at any point since nineteen seven.

A lot of that supply is expected to hit the market, and so I do think that, you know, we we aren't necessarily expecting to see a prolonged slide in rents, but I think these days of you know, extreme brain froth are definitely behind us. Why is that construction boom happening because for the past few years you would have expected, I mean, we talk a lot about on the show about supply chain issues how that impacted housing. You saw the big gap between single family housing starts and completions

supposedly because of a lot of supply chain issues. At a minimum, you would have expected some big multi family builders or investors to have a more uncertain outlook for the past two or three years. But that doesn't seem to have translated into any sort of construction slowdown. So why is that? You know, I think despite kind of the factors that you mentioned, the the outlook for multi

family has continued to remain pretty strong. And I think even as we talk about the market slowing down a little bit over these past few months, that's still a very minor decline when we think about it relative to what's happened over the past couple of years. So prices down three from the August peak, but still up compared

to their marks level. And so you know, we have really seen that, uh that brand prices are continuing to go up, and over the long run, we are seeing strong demand and and so I think, uh that is creating kind of you know, maintaining sort of a positive outlook for the multi family industry. And uh, can I and you know, can I ask this question in a slightly different way, like what is the bowl case for

a multi family here? Like why like what gives these big investors the confidence to keep building um at the rate that we've seen recently? Yeah? So, I mean, I think when we just look kind of holistically, it's definitely the case that the US housing market is still undersupplied. You know that there are kind of various estimates out

there on on how big that gap is. But Freddie Mack, for example, estimates that were have a shortage about four million housing units right now, and uh, you know, we we are still seeing kind of more and more of you know, obviously millennials are the largest generation, but Gen Z is also a large generation that's continuing to come of age and to form their own households, and there is still a lot of pent up demand there I think in terms of uh, you know, new household formation

that we could see going forward. And so I think that's really uh kind of them I say, macro level. I guess that would be kind of the broad picture. I think a lot of this also varies geographically as well. A lot of this contruction is happening in Sun Belt markets, and in those markets in particular have been continuing to draw release really strong demand. Yeah. I was just gonna ask actually that question, because you can like point on

a chart to production of new apartments going up. But of course isn't not really a commodity because you know, new apartments being built in Nashville or Dallas don't help me as a renter in New York City. Can you talk a little bit more about the geographical distribution of where this new supply is coming out. As I said, a lot of this is coming in in the sundult markets.

So when we look at you know, new permitting activity per capita, so how many new housing units are being permitted as a proportion of the existing number of housing units in a given market, Austin is far and away the leader there, but they really, you know, the ones that are seeing kind of the most permitting activity are really a lot of those Texas markets, Florida Market, Phoenix, in the big coastal you know, superstar cities, and contrast

places like New York, San Francisco, Boston. We're we're really not seeing that same level of activity. And so the markets that you know are kind of the nation's most expensive ones, the ones that have been under supplied for so long, we are continuing to see that be a problem where uh they are still under building. Um just in in terms of I guess the factors and motivations

that drive apartment construction. Can you talk to us a little bit about financing, Like what is a typical financing structure if I want to build a big, you know, apartment building of some sort do I take out, you know, a floating rate loan or am I so big that maybe I'm issuing my own bonds? Like how does that actually work? You know, that's a great question that isn't

necessarily my particular area of expertise. I don't have kind of the concrete details there, but you know, I will say that when we talk about kind of single family of our multi family constructed and obviously single family has slowed down quite a bit recently, and that is in response to sort of rising interest rates obviously hit mortgages as well, and so the rising interest rates really hit demand on the single family side in a way that

they don't on the multi family side. Family project, yeah, yeah, yeah, and multi family projects, I would also say, are just kind of bigger and more complex, and our endeavors unfold over a longer period of time, and so maybe a little bit less reacted to those kind of short term

fluctuations in the market. I want to go back to, you know, we talked about household formation or maybe I don't know, household deformation lately, and maybe people get roommates again, they're feeling a little less confident another like sort of maybe it's like medium term trend, and it seems like during the pandemic we did start to see a bit of a millennial baby boom. And my understanding and so I guess when people have kids, they're like, well, maybe we'll move out of the city, move out of a

multi family there's actually already have a second question. But the first question is like how does that factor into it? And again, you know, we're talking about SAT in the beginning, like all these things have been going in good for

multi family developers. Could this be like a meaningful, like medium term setback if there's some sort of structural shift among millennials, pretty huge generation right now, and which actually, you know what, we thought we were cool, but in the end we ended up boring like everyone else and we moved out to the suburbs. Yeah, definitely, you know, I think that is actually something that we've already been

seeing play out in our data. Is that kind of shift a a from the downtown areas and and towards the suburbs to a certain extent, when we look at our rent data and and break that out by you know, the core cities of major metros first they're surrounding stuburbs We've actually found that since the start of the pandemic, rent growth has been notably faster in uh in the suburbs of big metros as compared to the core cities.

Uh So, I think some of this, you know, is maybe due to just changing preferences because of the pandemic itself, folks, you know, maybe not feeling as safe in the early phases of the pandemic being in a dense urban environment, wanting to to space out a little bit more remote

work is also a factor here. But as you said, I think, you know, the millennial generation is now aging into this phase of of wanting to settle down and start families and uh and so you know, I think we can we definitely are starting to see some of those shifts already start to play out. I have another question, which is, like, so, I have two kids, but unlike other people, I actually am cool and I don't want to move to the suburbs. Like this episode is just

Joe taking like advice on handling his rent. No, this is this is a this is gonna be a gripe. This is this is a grape. Like I don't want to move to the suburbs. I like living in Manhattan. They've being said, you know, every once in a while, and we look like new developments and they're like, oh, really cool, and they have like a pool room and they have like a doorman, which is all stuff I've

never had before. They're like terrible for families, and they don't none of these buildings have like you know, like they'll like call the two bedroom and the second bedroom will like be a closet, like really and then like god forbid, like a third bedroom or something like never you never find it. Why is it that like all of this new development that they see, like none of it seems like suitable for people with kids. That's a

good question too. I think, you know, it has been the case that historically we do see these kind of shifts that you know, as folks kind of age into that phase of life of settling down and having kids. You know, that has been a pretty predictable pattern that you know, the majority of folks move out of the city and towards the suburbs. And so I think historically maybe that that that demand just hasn't necessarily been there

as much. But I do think that you know, we are also seeing that, as I said, we've been seeing some of these kind of shifts out of the city, but I do think that we are have also seen that millennials have kind of different preferences as well, and probably have a little bit more of a desire for those urban amenities than potentially prior generations, and so I think hopefully that will be something where, uh, the supply side starts to to come around and maybe cater to

that segment of the market a little bit more. But historically I think maybe that that just hasn't necessarily been the case as much, and so potentially property is kind of working on a little bit of an outdated model potentially on on what folks are desiring. Let me ask a really basic, simple question that we probably should have asked at the are the beginning, but how low could

rents go from here? What's the outlook? So I think, you know, our our base case for this year is that we're not really expecting to see a decline for full year three, We're probably expecting to see very modest positive rent growth, maybe a couple of percentage points. But I think there is the possibility that rents could continue

to slide, particularly if we do enter a recession. This year, if the labor market continues to weaken, and uh, you know, we do enter a phase where there's possibly a contraction in household that that may be reversed as some of this household formation that's happened in recent years. There's certainly, uh, there is certainly the possibility that rents could continue to trend downward. Uh. As I said, that's not really the

base case that I'm working with right now. And even if rents were to continue sliding in you know, that downside scenario where potentially we enter session, I don't think we're talking about declines anywhere near the magnitude that would reverse the increases that we saw in Say what's the biggest wild card or the most important factor in that outlook? Like, what would give you reason to pause and say, actually,

maybe maybe things could go in a different direction. Is it something like, you know, if there's a recession, an unemployment picks up, or something like if if capacity suddenly booms even more Like, what is what is that that pressure point for that look? I would say it really is probably just what's happening in the in the broader macro environment and the labor market in particular, as I said, you know, we we've got kind of record number of

new units in the construction pipeline. So the supply side of it seems pretty clear that we are going to get a lot of new supply coming online this year, and I think the demand side is going to be a little bit more of an X factor, uh as you know, as as we've looked at these past few months of economic data, obviously inflation has already started to come down. There's maybe uh some some frightening signs that potentially the FED can achieve, you know, this soft landing

that they've been talking about. But at the same time, you know, there is still this sort of recession risk and consumer sentiment you can have it if it's rebounded a little bit, is still uh not great. And so I think that really is uh you know, probably probably the biggest thing that I'll be keeping an eye on.

If if the labor market continues to weaken and we see tightened unemployment, then that's definitely something that we would expect to impact the demand side of the equation, uh, and that that would maybe be the case where rents continue to slide. You know, I just want to actually go back to the recent decline and uh in historical context, because you said, right, you know, it's not that weird to get a few of these soft months. The most recent prints do seem to be a little bit more

on the unusual, unseasoned side. What are some past comparisons, Like, what are we talking about in terms of like what prior downturns looked like if at the end of you're like, wow, this really did turn out to be a very different year. Is a bad year? Like what are we talking about in terms of like magnitude and how far do you have to like go back before in time to like

see uh, to understand this context. As I said, you know, when we when we talk about the recent declines August three, December down three percent, Uh, the past three months of rent declines are actually you know, in the history of our index, which like I said, we're going back to seventeen here. Uh, those these past three months October, November, December, those are the three sharpest declines in the history of

our National rent Index for comparison. You know, that three percent to client that we've seen over these past few months is in comparison to say a more you know, normal year of nineteen we were seeing a decline of maybe one and a half percent over over that same stretch of months, And so definitely you know, sharper right now than what we've typically seen as far as you know what happens in kind of times of of of

sort of broader economic down terms. Uh, you know, we don't really have the the longer history in our index to be able to to give the direct comparison there. But as I said, you know, if you look at just rent cp I, obviously that's a little bit of a different measure than than our index. But even in the aftermath of the two eight recession, there wasn't really a significant decline there. It was basically just flat for

a couple of years. So you know, at least in nominal terms, we weren't seeing prices come down by a significant amount. Again, because of the differences in how it's tracked and cp I versus our index, we we probably were talking about a little bit of a decline in in in new lease prices, um, but I think you know, to to answer questions in terms of magnitudes of you know,

how much could things come down? I think even in that that downside scenario, if you know if we were to enter a recession on the national level, you know, maybe five percent, I would say ten percent would be would feel pretty extraordinary to me. Um. Obviously, again, this is something that varies market by market, so some markets could could definitely see sharper declines. It's really the fact that great the Great Financial Crisis, that rents didn't actually

they just stalled, but they didn't even plunge. That kind of makes me believe that they sort of like, you know, every episode we've done for years, like lessons from the Crisis, right in some way in the lesson for multi family from the Crisis, that it never goes down, which kind of makes me believe that that's sort of like one day that Minskew moment hard landing could come from for

the industry anyway. Chris Salviati, economist at Department List, thank you so much for coming on Odd Lots, helping us to finally address the topic that we should have probably touched on a long time. Thanks so much for having me. It was a lot of fun. Tracy, I just want to start off by reiterating that I have a very

good landlord. She is very responsive in their issues in the apartment with appliances, etcetera, and that I hope she's listening, and how much we appreciate her responsiveness, and yeah, anyway, I just want to get that out of the way again. The fact that you keep addressing your landlord, who may or may not listen to this episode makes me think that actually, maybe the landlord has a decent amount of pricing power here. And the more you say it, the

more she's going to realize that You're right. I'm like totally backing myself into a corner by I'm showing my hand how much we want to stay in the unit. You should be like, I don't care. I like moving whatever, I likeaucracy, all of these all of these new buildings have great amenities that I can use. No, but I do think, I mean the My major take from that discussion is that it's good to be a landlord, and

it seems good to be a multi family landlord. There is a big question mark that you kept alluding to about whether or not at some point the boom and the expansion um, the supply side expansion, whether or not that will come home to roost. But it seems I don't know, like given the structural lack of housing in the US, it seems like we're a long way off from that. I'll tweet out the chart when this episode

comes out so people know. But like we have this index US US multi family unit started for rent, and it's just so far above pre Great Financial Crisis. I mean, it's way above pre COVID levels, pre Financial crisis. The last time it was this high, at least on this index, looks like it was like six. So I mean, this is just like an industry that just wins, wins, wins, winds.

But I do think, you know, like again, I do remember we probably read, maybe even wrote, like some stories like well millennials be scar on owning homes forever and two thousand ten and that was a popular thing. And now, like you know, everyone got boring and they had kids and they moved out to the suburbs and they bought a house if they could. And so I do wonder, I do like buy this idea, like maybe like maybe

some some big shift is going to happen. You know what's interesting if you chart that line multi family units started for rent versus multi family units started for sale, it's two very different directions. So for sale ones just plunges and the for rent one just keeps going up. Oh that's a great shore, you know. Yeah, yes, we should definitely write that, not just tweet about it. Yeah, no, you're right. Wow, I never looked at this, and okay,

there's plenty of um. The other thing that's surpribably, can I just say, actually before you know, it's interesting and I don't know if this chart exists, but I think the flip side is that there has been an increase in single family units for rent, which is not a category of housing that gets a lot of discussion, but it is a growing sector of like single family household units, but for the rental market anyway, I think that actually is a that's some interesting stuff here to explore further,

for sure. And you know the other thing that surprises me about that whole episode, Yes, we managed to get through it without once saying that the rent is too damn high, which I thought one of us was for sure, for sure gonna bring you just took care of that for us. Yeah, okay, I did it. Shall we leave it there, Let's leave it there. Okay. This has been another episode of the Odd Thoughts podcast. I'm Tracy Alloway. You can follow me on Twitter at Tracy Alloway and

I'm Joe Why Isn't All? You can follow me on Twitter at The Stalwart. Follow our guest Chris Salviati. He's at Chris Underscore Salviati. Follow our producers Kerman Rodriguez at Kerman Arman and Dash Bennett at Dashbot. And check out all of our podcasts at Bloomberg under the handle at podcasts. And for more odd Lots content, go to Bloomberg dot com slash odd Lots, where we post transcripts Tracy and Tracy and I blog. We have a weekly newsletter that

comes out every Friday. Go there, give us your email sign up for it. Thanks for listening.