How to Analyze Rental Markets

A Brooklyn developer just leased 25% faster than 7 competing projects in a 3-block radius. Rents 10-20% above market. With 18 more lease-ups in the pipeline, many backed by institutional developers with bigger budgets and stronger brands. The edge wasn't location or capital, but a design-oriented focus on the drivers of real rent premiums. Fve lessons from Charney Companies' development at Union Channel in Brooklyn, New York: 1/ Unit mix. Pulled architectural plans for every competing project in the market. 3-bedrooms were 3% of supply but demand pointed to 14%. Union Channel tripled the market average. They were the first unit type to fully lease. 2/ Studios. Market average was 500 sqft at $3,500/month. Too much space, too much rent. Union Channel built 400 sqft studios — 20% smaller, 10% cheaper. Leased 50% faster than the rest of the building. 3/ Living rooms. Of every layout variable tested across hundreds of units, living room width was the single strongest predictor of rent per sqft. Every other layout decision was calibrated to protect it. 4/ Amenities. Conventional wisdom says more amenities = more value. The data says the opposite. Quality of select amenities beats breadth. Fitness center quality had the strongest correlation with rent per sqft. They hired a gym consultant instead of designing in-house. 5/ Marketing. 20% of leases came directly from social media — 4x the rate on prior projects. Strategy built around the neighborhood, not the building. Murals on construction fencing. 3,000 organic Instagram followers before opening. These five decisions account for 73% of the value created at Union Channel. All made before the building opened. The data exists in every market. Most developers just aren't looking. Full case study from Andrew Steiker-Epstein in this week's Thesis Driven newsletter. Link in comments.

A new analysis by howmuch.net reveals a striking affordability gap across U.S. metros—Irvine, CA residents need to work 117 hours/month just to pay their mortgage, while in Louisville, KY it's only 18 hours. 🔥 🌇 Key Insight for Multifamily Stakeholders: When the cost of owning a home (or paying a mortgage) becomes economically unsustainable—as seen in metros like Los Angeles (115 hrs), San Jose (101 hrs), and NYC (98 hrs)—renter demand inevitably increases. That pressure translates into lower homeownership rates and greater competition for high-quality rentals. 📊 Methodology Breakdown: This data combines: Median home prices from Zillow Current 30-year fixed mortgage rates Median household incomes from the U.S. Census Then calculates how many hours a median-income earner must work per month to afford a mortgage. 🧭 Strategic Takeaway: In high-hour metros, rental housing isn’t a choice—it’s a necessity. Smart investors and developers should double down on markets where the cost of ownership is climbing out of reach, and focus on designing affordability with value. #MultifamilyInvestment #HousingAffordability #CRE #BuildToRent #RealEstateDevelopment #RentVsBuy #PropTech #HousingCrisis #MarketStadium

This is one of the biggest risks no one is talking about for long-term apartment and SFR demand: A weak for-sale housing market. In fact, most people view it (very incorrectly!) as a tailwind instead of a headwind. Here's why they have it wrong, and why every rental housing investor should CHEER for increased home sales and a healthy for-sale housing market. It's all about the economy. When homes are selling, there's enormous downstream benefit to the economy. Think about it logically: The best years for rent growth typically align with good years in the for-sale housing market, i.e. 2021, mid-2000s, mid/late 2010s. And remember all those prognosticators (not me) saying 2024 would be the "best of times" for single-family rentals due to a weak for-sale housing market? Didn't happen. Instead, SFR rent growth cooled a bit. Why? Why is conventional thinking wrong about this? Here's what The Wall Street Journal reported: "The sputtering U.S. housing market is hurting the businesses that depend on Americans opening their wallets to fix up and furnish their new homes. Retailers announced more U.S. store closures than openings in 2024, according to data firm Coresight Research, reversing a two-year trend of net openings. Home retailers were one of the biggest drivers of the contraction." When people buy homes, they spend a lot of money stocking and fixing and servicing those homes. When spending slows down, economic growth slows down. When economic growth slows down, job growth and household formation slows down. When job growth and household formation slows, there's LESS DEMAND for housing ... and that includes apartments and single-family rentals. When homes are selling, apartment and SFR operators see more turnover, yes. But in that environment, units typically get backfilled quicker -- and often at a higher rent. Rising tide boosts all ships. Loss of renters to home purchase is not a boogeyman to be feared. It's (usually) reflective of a strong demand environment. That's one of several reasons why I advise rental housing investors not to oversell data on reduced move-outs to purchase. People may renew more; but over the longer term, reduced mobility is never a tailwind. We'd likely see it coupled with reduced new lease demand, too. Remember that rental housing demand and rent growth are dependent on the economy. The U.S. economy needs a healthy for-sale housing market. To be clear: I don't think 2025 will be doomsday because of a weak for-sale housing market. But I do think it's a headwind for growth -- one that would become more and more obvious as time goes on. Thoughts? https://lnkd.in/gRThaqgi

Growth in the labor force and rising wages account for roughly half of the historic total returns in commercial real estate (see last week's post for details). This week’s risk management rate cut from the Fed should further support the labor market outlook. We anticipate 25 basis point rate cuts at each of the remaining two FOMC meetings in 2025. Supply is the second most important factor driving commercial real estate returns. Intuitively, when supply remains constant and demand increases, rent growth tends to accelerate. Below are two charts on multifamily supply that suggest a positive outlook for rent growth: 1️⃣ Months of supply is falling rapidly, now averaging just 14 months across the U.S.—a measure of how long it would take to lease the current development pipeline at today’s demand levels. Compared to historical norms, the supply/demand ratio has shifted significantly in favor of landlords. The chart also highlights just how extraordinary the COVID-era supply boom was. 2️⃣ With only 14 months of supply, historical trends indicate we could see robust rent growth of around 5% over the next year.

One of the things I have learned over 17 years of buying multifamily real estate is that national data tells you very little about what is actually happening in a specific neighborhood.   You can read a headline that says rent growth is flat in a major metro and miss the fact that one submarket three miles away is performing well because a new employer moved in, a school district improved, or new supply never materialized there.   We call our approach "investing below the zip code."   What that means in practice is this: we target infill and first-ring suburban neighborhoods that national data tends to overlook or misread, but that our local teams understand well because they are embedded in those markets every day.   The communities we focus on serve renters at roughly 120% of area median income. Households that earn too much to qualify for subsidized housing but cannot afford to buy at today's prices and mortgage rates. For these residents, renting is not a transitional choice. It is where they live.   We have found that demand in these neighborhoods tends to be durable across market cycles because it is driven by necessity rather than preference.   The headline data will not always reflect that. That is part of what creates the opportunity.

‼️ US rents grew 33% between 2019 and 2024, more than double the previous five-year pace. Metro-level growth ranged from 7% to 55%, and the Sunbelt saw both extremes. On the Western Sunbelt, Arizona, Idaho, Nevada, and Utah all posted rent growth above 44%. 🌄 At the metro level, Boise, ID saw the largest increase at 55.2%, followed by St. George, UT at 54.3%. On the other end, several eastern Sunbelt metros lagged inflation: Danville, KY, Oxford, MS, and Enid, OK all recorded sub-8% growth. 🤔 What explains the divergence? Pandemic-era remote work and record-low mortgage rates accelerated lifestyle-motivated migration into lower-cost Mountain West markets, sharply increasing rental demand. At the same time, chronic underbuilding and tighter land-use constraints in Western metros limited supply responsiveness. Meanwhile, parts of the Southeast delivered record multifamily completions, helping moderate rent growth relative to the West. 🏗️ These forces are already reshaping migration flows. California, New York, and Illinois led domestic out-migration in 2023–2024, while Texas and North Carolina saw the largest gains. Today, nearly half of U.S. renters are cost-burdened. If current trends persist, affordability will increasingly determine where households move — and where growth concentrates. Follow us for more insights from the latest ACS release ➡️ Forty5Park #Demographics #CensusData #RealEstate #Inflation

In the first quarter of 2025, a striking shift has emerged in the South African rental market: One in four applicants is now classified as high-risk. The latest PayProp South Africa Rental Index indicated that 26% of rental applicants landed in the highest risk category, an increase from 25% at the same time last year. This signals that affordability is becoming a growing concern. Applicants earning R80,000 or more monthly demonstrate significantly greater stability, with over 60% rated minimum-risk, compared to just 23% in the R10,000 – R20,000 income bracket. The lower-income group also shows a higher proportion of high-risk applicants, at 37%, highlighting how closely income levels are tied to rental reliability. Age also plays a notable role. Young renters aged 20 – 29 represent the least predictable profile, with only 29.6% rated minimum risk. This likely reflects shorter credit and rental track records. In contrast, applicants over 60 fare best, with a minimum-risk rate exceeding 61%. What does this mean for landlords and agents? Relying solely on traditional credit checks or intuition is no longer sufficient. Tools combining rental payment history with credit data offer a more complete picture of an applicant’s financial reliability, proving far more effective at predicting risk. In a tightening rental market, thoughtful and data-driven vetting is essential. Through the use of smarter screening tools, agents can confidently prioritise reliable tenants across all demographics while fostering access for lower-income earners who consistently demonstrate responsible behaviour. This balanced, informed approach is key to fair and sustainable property management in a landscape where one in four applicants poses elevated risk.

In my last post I shared a map showing the disproportionate share of population growth going to Sunbelt states, and population declines in NY/CA/IL since 2020. The next logical question is, how did this translate to rent growth? The conventional wisdom is higher population growth/household growth = higher demand = higher rent growth. Well as it turns out, the real answer is much more complex than that. Let’s compare rent growth since 2015 and 2019 between two segments; Gateway markets – representing low growth states, and Sunbelt markets – representing high growth states. In this analysis, Gateway markets include NYC/LA/SF/CHI/BOS/DC/PHI, Sunbelt markets are ATL/DAL/PHX/TAM/ORL/NASH/AUS/HOU/MIA/CHRL. Since 2015, the number of households in the Sunbelt grew 21% vs 6% in Gateway markets (14%/4% since 2019). Put another way, Sunbelt markets grew more than three times faster than their Gateway counterparts over the past decade. How does this translate to rent growth? Since 2019, same-store rents grew 23% in Sunbelt markets vs 24% in Gateway markets (42%/40% since 2015). Meaning that ‘demand’ didn’t necessarily translate to higher rent growth. Why? Price is a function of demand AND supply, and the Sunbelt saw a surge in supply to match the outsized demand. New deliveries of institutional apartments since 2019 represented 29% of rental inventory in Sunbelt markets vs just 16% in Gateway markets. Including Build-to-Rent brings the Sunbelt total to 34%! Compound this with outsized new supply of for-sale housing and lower rates of obsolescence in the Sunbelt and you get the conditions necessary to offset the surge in headline demand. The relative ease of development in the Sunbelt is great for renters, but it’s a major risk for investors. Easy come, easy go. 

A 1.07% vacancy rate tells you more about Cape Town’s market than any price graph ever will. People often focus on price movements first. I look at vacancy. Right now, Cape Town is sitting at a 1.07% vacancy rate. That is essentially zero. And when vacancy drops to this level, everything in the market starts behaving differently. Properties don’t sit. They move. In many areas, apartments are selling within three to five weeks. In some cases, before they even make it online. Buyers are outnumbering opportunities, and that imbalance is what’s dictating the market far more than any headline about price growth. It’s also why yields in the central nodes are sitting between eight and eleven percent. Demand is deep. Stock is thin. And well-priced, well-positioned properties are being absorbed instantly. This is exactly what we’re seeing on the Atlantic Seaboard and City Bowl. Because we are market leaders and a large sales and rental business, stock often lands with us first. Our agents are sourcing a meaningful amount of stock off-market because that is where most of the opportunity is sitting. And when something unique does come to market, it doesn’t stay there for long. A low vacancy rate is the clearest indicator of confidence. Not sentiment. Not speculation. Actual behaviour. If you’re an agent, it’s a signal that your job right now is not to sit back and wait for stock to land on your desk. It’s to go and find it.

🔎 39% of people searching for Austin apartments are coming from outside the metro. And they're bringing $70K median household incomes with them 💵 Our Q4 2025 Austin Market Report just dropped, and the migration data tells a story that rent trends alone miss: 🎯 Top 3 inbound markets: Dallas → Houston → San Antonio 📈 457K renter households in metro (up 110K in 5 years) 💼 Remote work adoption: 18% of renters (9.4% increase) 🏘️ Large multifamily share: up 5.6% as renters shift housing preferences Meanwhile, the supply side is responding aggressively: → 20,544 units under construction metro-wide → 52% of properties offering concessions (1+ months free) → Median rents down 6.6% YoY to $1,319 But here's where submarket analysis matters: 🏡 Georgetown: 74% concession rate, -11.5% rent YoY 👩🏻🎓 San Marcos: 45% concession rate, -7.0% rent YoY Same metro, completely different operator realities. This is why our Econ Team (shoutout Rob Warnock and Chris Salviati 🎉) builds these reports. Combining our platform's search and listing data with demographic intelligence to show you not just what's happening, but WHO is driving it and WHERE opportunities exist. We're doing this analysis across markets nationwide, giving partners the insights they need to underwrite, position, and operate with confidence 🗺️ How are migration patterns impacting your markets? Do you want a different metro level doc? Let me know below, happy to help! #MultifamilyInvesting #RealEstateAnalytics #MarketIntelligence #ApartmentData #MigrationTrends