The Rent Roll with Jay Parsons
Episode #64: Mike Wolfson | What I Got Wrong (And Right!) in 2025
Date: December 18, 2025
Host: Jay Parsons
Guest: Mike Wolfson, Managing Director & Head of Multifamily Capital Markets Research, Newmark
Episode Overview
This episode is a year-in-review and accountability check for host Jay Parsons, who revisits his 2024 predictions for the rental housing sector (multifamily, SFR, BTR) and grades himself on what he got right and wrong about 2025. In the second half, Jay interviews Mike Wolfson, a respected capital markets researcher at Newmark, for a deep dive into how 2025 unfolded, the nuances behind trends, and projections for 2026, especially around capital flows and market fundamentals.
Key Topics & Highlights
1. Jay’s Self-Assessment of 2025 Predictions
Summary of Predictions (03:49-16:34)
- Jay rolled back to episode 15, where he made 10 predictions for rental housing in 2025.
- Results: 7 right, 1 half credit, 2 wrong.
- This transparent review offered lessons in forecasting and industry trends.
Prediction Breakdown & Self-Grades
-
Apartment Construction Starts Bottoming Out (04:17)
- Prediction: Starts nearing a bottom, staying at low levels.
- Result: Correct. Levels “leveled off” at ~235,000–237,000 units.
- Quote:
“Apartment construction starts are bottoming out ... I think we're likely nearing the bottom on apartment starts.” (04:17)
- Grade: ✓
-
Strong Apartment Demand (05:57)
- Prediction: Demand would remain strong, just below 2024 but still high.
- Result: Correct. 2025 on track for top-tier absorption.
- Grade: ✓
-
Wage Growth Outpacing Rent Growth (06:56)
- Prediction: Affordability improves as wage growth beats rent growth.
- Result: Correct: Wage growth at 4.1% vs. near-zero apartment rent growth.
- Quote:
“Wage growth has far surpassed rent growth in 2025 ... That is a win for affordability.” (07:00)
- Grade: ✓
-
Operators to Prioritize Occupancy over Rent – With Lower Retention (08:04)
- Prediction: Operators focus on occupancy; retention rates would dip.
- Result: Partially correct. Occupancy focus true, but retention rose even further.
- Quote:
“I doubled down on that bad guess for 2025 by saying, hey, this has to be the year retention goes down a little bit. And I was wrong. It went up yet again.” (09:05)
- Grade: ½
-
Apartment Rents Will Grow by Low Single Digits (10:32)
- Prediction: Rent growth in the 0–5% range (most likely low single digits).
- Result: Wrong. Rents were flat—closer to 0%.
- Quote:
“Saying 0 to 5%. No one should get any credit for that whatsoever. And I'm not going to pat myself on the back for saying that.” (10:54)
- Grade: ✗
-
Midwest & Coast Outperform Sun Belt on Rents (11:40)
- Prediction: Midwest/coast will again outperform Sun Belt/Mountain regions.
- Result: Correct. Anticipated supply-driven Sun Belt slowdown played out.
- Grade: ✓
-
Moderate Pickup in Apartment Sales Volumes (11:43–12:55)
- Prediction: Sales volume to moderately increase from 2024.
- Result: Correct; up 9% year-over-year.
- Grade: ✓
-
Distress Will Remain Limited (12:55–14:06)
- Prediction: Noise around distress, but overall market impact limited.
- Result: Correct. Some increase but “not a widespread issue.”
- Grade: ✓
-
SFR Acquisitions Remain Muted (14:09)
- Prediction: SFR investor acquisitions stay low, focus on BTR/portfolios.
- Result: Correct. Large investors purchased only ~0.5% of homes sold.
- Grade: ✓
-
SFR Rent Growth Will Slow to ~3% (14:28–16:27)
- Prediction: SFR rent growth slows but remains around 3%.
- Result: Wrong. Ended closer to 2%.
- Quote:
“To miss by a full percentage point, that's a miss.” (16:18)
- Grade: ✗
Scorecard
- Final Tally: 7 right, 1 partial, 2 wrong
2. Industry Insights, News, and Trivia
Rent Growth Trivia (16:34–24:59)
- Which market led the nation in apartment rent growth in 2024?
- Answer: Detroit, with 3.2–3.9% rent growth.
- “Detroit still a solid, steady market ... but it has trailed off in recent months to around the 1% rent growth.” (24:59)
Headlines Discussed
-
AIMCO Liquidation in Chicago (18:25)
- Selling 1,495 units for $455 million; company continues to exit the space.
- “I just hate seeing another publicly traded REIT take a step closer to the exit, and particularly Aimco ... at one point the largest apartment owner in the world.” (19:19)
-
WSJ: Twin Cities Rent Control vs. Supply (21:00)
- St. Paul’s rent control backfires—permits plummet, values drop, rent rises more in controlled city.
- Key Quotes:
- “Rent control sideline, St. Paul from the nation’s biggest building boom in a half century.”
- “Property values in St. Paul fell at least 6% because of rent control ... shifting the burden onto homeowners.” (23:10)
3. In-Depth Interview: Mike Wolfson, Newmark
How 2025 Matched (and Missed) Expectations (26:46–30:47)
- Absorption: Predicted and saw strong absorption, driven by a locked-up for-sale market.
- Rent Growth: Expected more rent growth; turned out much more muted due to supply and local competition.
- “We were pretty optimistic about absorption ... Not as strong as it was, but we were pretty optimistic ... One area we did not get directionally right was ... rent [growth].” (28:51)
- Sales Activity: Anticipated a pickup, but “rates and the equity markets really reacting very quickly to liberation day” caused temporary setbacks. (30:47)
Current Fundamentals & Outlook (31:17–34:49)
- Jay: “When does rent growth return in your view?”
- Mike:
- Rent growth will “gradually tick up throughout the year” [2026], but remain below long-term averages, especially in high-growth (Sun Belt) markets still digesting supply.
- Wide divergence between class A and C; capital will allocate more to Midwest and “less correlated” markets like Columbus, Ohio.
- “We just also have to remember ... we had 4% demand compared to the overall inventory. That is a record level.”
Liquidity and Capital Flows (35:04–40:55)
- “Not a lot of lack of liquidity in multifamily, pretty much in any market. It’s about what becomes available.” (35:07)
- Capital is “waiting to see some return of rent growth” to trigger broader investment.
- “Buyers are willing to take on, be able to buy at a higher rate if they believe they can grow out of ... rent growth. What they are not willing to do is lose money.” (35:50)
The Rise of Debt Funds (36:50–40:55)
- Debt fund originations up 85% year-over-year; funds’ share of multifamily lending doubled from 11% to 20% in two years.
- Banks sidelined due to regulation, especially from office loan exposure; debt funds not as constrained and thus much more active.
- Quote:
"Debt funds have gone from about 11% to about 20% [market share] in 24 months ... I would not be surprised to see debt funds overtake banks in the near future." (38:22)
Distress – Nature & Prospects (41:03–44:06)
- $171B in potentially troubled loans maturing 2025–26, but concentrated in small, non-institutional, floating-rate, value-add deals—usually older and less attractive to leading capital.
- Institutional capital overwhelmingly targets newer (post-2000) assets—these are only 29% of the national stock but make up 67% of trades.
- “Operators don’t want the same kind of capex ... Class A, 2010 and greater, is really where ... most of the bigger investors are looking.” (45:55)
- Restructuring and recap activity for troubled assets taking time; unlikely to be any quick, broad solution.
Cap Rate and Spread Discussion (45:45–53:15)
- Cap rate–interest rate spreads remain compressed, but buyers are betting more on future rent growth than on rate cuts.
- “If someone were going to say, hey, we're not going to get any rent growth for the first three to five years, I think most investors would probably hold off on that deal." (53:09)
2026 Projections (54:05–58:31)
- Sales volume: Expects a 15–20% increase in investment sales; “liquidity will be there.”
- Asset focus: Ongoing preference for newer assets in Sun Belt/growth markets; Midwest and stable coastal suburbs also trending up.
- Bold Call: Predicts progress toward private real estate (including multifamily) access in 401(k)s.
- “If that liquidity were to come into multifamily, there would be a big boom in terms of the property type.” (56:29)
- Macro risks: All predictions caveated with “barring any black swan event.”
Allocations & Market Preferences (57:01–58:31)
- Investors circling core-adjacent/coastal suburb strategies (e.g., New Jersey suburbs of New York).
- Expect more institutional appetite in “steady Eddy” Midwest and stabilizing Sun Belt markets.
Notable Quotes (by Timestamp)
- Jay Parsons: “I don't have a crystal ball ... The crystal ball is fuzzy. But I'll give you my perspective on what I think the indicators are pointing to.” (00:36)
- Jay Parsons: “Wage growth has far surpassed rent growth in 2025 ... That is a win for affordability.” (07:00)
- Jay Parsons: “Not a lot of buying activity [in SFR]. Investors are sidelined too, just like a lot of individual home buyers.” (14:34)
- Jay Parsons: “It just backfired on St. Paul [rent control] ... Property values in St. Paul fell at least 6% because of rent control.” (23:10)
- Mike Wolfson: "Buyers are willing to take on ... a higher rate if they believe they can grow out of that based on rent growth. What they are not willing to do is lose money." (35:50)
- Mike Wolfson: “Debt funds have gone from about 11% to about 20% [of loan volume] in 24 months ... I would not be surprised to see debt funds overtake banks in the near future.” (38:22)
- Mike Wolfson: “If someone were going to say, hey, we're not going to get any rent growth for the first three to five years, I think most investors would hold off on that deal right now.” (53:09)
- Mike Wolfson: “The investment sales market and values are going to rise ... [I] would bet the investment sales market increases about 15 to 20%.” (54:12)
- Mike Wolfson: “If [private real estate in 401(k)s] happens in 2026 ... there would be a big boom in terms of the property type.” (56:29)
Key Timestamps
- 03:49 — Jay’s 2025 self-scorecard preview.
- 04:17–16:34 — Detailed breakdown of each 2025 prediction.
- 19:19 — Aimco exits: context on REIT retrenchment.
- 21:00–24:59 — Rent control tale: St. Paul vs. Minneapolis.
- 24:59 — Rent growth trivia answer: Detroit.
- 26:46 — Mike Wolfson interview begins: background, perspective, and 2025 reflection.
- 31:17 — Discussion on market fundamentals, absorption, and rent growth.
- 36:50–40:55 — Trends in debt origination and the rise of debt funds.
- 41:03–44:06 — Dissection of distress in multifamily markets.
- 45:45–53:15 — Cap rate, interest rate, and investment thesis debate.
- 54:05–58:31 — Mike’s 2026 predictions and capital flow projections.
- 58:32 — Closing remarks.
Final Takeaway
Jay Parsons closes with a reminder:
“Transparency matters ... We'll see how we do next year.” (16:31)
Next Up: A special New Year’s episode with John Burns for 2026 predictions.