Optimism and Anxiety Collide in Apartment Industry

Periods of extreme optimism and those mired in a rising-inflation environment are circumstances the multifamily housing industry has dealt with before. But rare is today’s mood, according to RealPage’s Jay Parsons, “I’ve never seen so much exuberance about the ‘now’ and anxiety about the ‘future’ all at one time.” Parsons is the property management software firm’s vice president, head of economics and housing. He sat with Daniel Mahoney, managing director, LaSalle Investment Management; and Grant Montgomery, VP of Research, WashREIT; during a panel at National Apartment Association’s Apartmentalize conference recently in San Diego. The session, “Focus on the Road Ahead: The Economy and Multifamily Housing Sector,” addressed where investment and energy be targeted to yield maximum results as economists and their investors explore conditions and expectations in the U.S. economy. Key to this decision-making are the changing demographics and resident preferences for owning versus renting thrown in with the new economy. Inflation and Stagflation in the Conversation Borrowing a line from Mark Twain, “History doesn’t repeat itself but it does often rhyme,” Mahoney said, citing today’s inflation read at the highest it’s been in 40 years. “But we’ve been here before and we can look at what happened then. From 1974 to 1986 rents still grew 9 percent to 10 percent annually. The Fed came in and raised interest rates that put us into two unique recessions. Even during these recessions, rents were up.” Interestingly, the country’s demographics then were dominated by the Baby Boomers, who were first becoming home owners. Now, renters are ages 25-34 and there are 6.6 million of them and they have different perspectives – more favorable to renting – than Boomers and their desire to own a home. Stagflation, too, has entered the conve...