Here are four main takeaways from the Apartment Strategies Conference
1) Economic expectations:
Inflation is declining towards the Fed’s 2% target. This will result in 3 to 4 interest rate cuts during 2024. Many markets are oversupplied with new housing, but one bright spot for demand is immigration. Over 3 million new immigrants will change absorption dynamics. To follow where the demand is headed, look to affordable destinations. Affordability was cited as the #1 reason people move to a new market.
2) Multifamily forecast:
Jay Parsons, SVP, Chief Economist, RealPage, sees a steep drop off in apartment deliveries in 18 months. He notes that construction delays today aren’t short-term. This will re-accelerate rents once the near-term supply is absorbed. For now, midwestern cities were cited as the winners for 2024. They have the least new supply and a renewed focus on manufacturing could set these cities up to outperform. In general, the renter remains strong with wages growing faster than rents and consumer confidence ticking up.
3) Using tech to provide a better experience:
Data makes everything work. Owners must aggregate, decipher, and implement strategies to use their data. The use of AI will only increase. It’s used now for chat/call bots, delinquency collection, and uncovering common tenant complaints. Standard tech like community Wi-Fi and smart building access are also important. These not only add value to the tenants but are ways of collecting data.
Case in point:
According to Scott Wesson, SVP, Chief Digital Officer of UDR, resident satisfaction increased when their onsite staff was reduced by 42%. UDR believes its focus on data and speed provides a better tenant (customer) experience.
4) Operational and public policy risks:
Insurance costs –
The largest owners are taking insurance in-house through self-insurance programs and creative partnerships. Having scale matters. Master policies from third-party managers can help smaller owners find cost-effective solutions.
Regulatory changes –
Rising operating costs –
Looking ahead: In 2024
2024 appears to be shaping up as a year of transition.
