Podcast Summary: The Rent Roll with Jay Parsons

Episode 65: John Burns | 15 Predictions for Apartments & SFR 2026

Release Date: January 1, 2026
Host: Jay Parsons
Guest: John Burns (Founder & CEO, John Burns Research & Consulting)

Overview

Jay Parsons kicks off 2026 with a packed episode featuring housing industry legend John Burns. The episode is anchored around “15 Predictions for Apartments & SFR (Single Family Rentals) in 2026,” plus a deep-dive interview with Burns covering rental dynamics, demographic trends, investment capital, and more. The tone is data-dense but conversational, blending high-level insight with grounded, practical wisdom for owners, operators, investors, and industry professionals.

Jay Parsons’ 15 Predictions for Rental Housing in 2026

Theme: Measured optimism with select caution around supply, absorption, and renewal challenges.

1. Gain-to-Lease & Inverted Rent Rolls: The Hot Topic

[03:47 - 16:10]

• Operators will increasingly face situations where advertised/new leases are lower than renewal rates or in-place rents.
• Presents a dilemma: Cut renewals to market (risking NOI) or push renewals and risk move-outs.
• Parsons warns: "It’s not the 2 or 3% increase that’s the deal killer; it’s what you’d pay to renew versus a comparable unit—maybe even in the same building." (11:55)
• Outcome hinges on new lease rent growth in the spring leasing season.

2. Apartment and BTR Supply Will Drop Sharply

[16:10 - 18:25]

• New completions in 2026 will fall to about 300,000 units—lowest in a decade.
• Build-to-rent (BTR) also drops off; “lowest since before the BTR boom.”
• Parsons cautions: “We still have a lot of newly built properties ... still going through a prolonged lease-up process.” (17:30)

3. Absorption Will Fall, But Vacancy Could Improve

[18:25 - 21:28]

• Slower absorption is expected due to less new supply.
• Lower absorption is not alarming unless supply and vacancy move out of sync.
• "Do not panic if and when absorption numbers drop off ... that is not a bad scenario for the US apartment market.” (20:31)

4. Immigration’s Demand Impact Will Be Isolated, Not Systemic

[21:28 - 25:30]

• Immigration boosts demand but is not the sole factor.
• Recent immigrant households are larger, so household formation per immigrant is low.
• Impact on vacancies will be significant only in specific submarkets (e.g., tech hubs, student markets).
• "You’ll be able to point to, say, it's happening here and here ... but it’s not systemic." (24:57)

5. Turnover May Finally Pick Up

[25:30 - 27:51]

• Despite years of predictions, turnover kept falling. Parsons is "tripling down" on a “bad call” that it has to go up eventually.
• Generous 2025 concessions and above-market renewals might push deal-seekers to move.

6. Policy: More Pro-Housing Efforts, Mixed Results

[27:51 - 29:34]

• More states/cities will push for pro-supply housing policies.
• Federal action possible, but implementation and immediate effects will remain limited.

7. New Construction Gradually Gains Favor for Capital

[29:34 - 32:07]

• Once the 2024/25 supply wave stabilizes, capital may trickle back to new construction—mostly to large, efficient developers.

8. Apartment Rent Growth Might Beat Consensus (>2%)

[32:07 - 35:33]

• Parsons bets “over” 2% effective rent growth if the job market holds and concessions burn off; all-in pricing (bundled fees) may inflate published rent growth figures.
• “Once some of those markets turn, it’s not going to surprise me to see a quick snapback in rents...” (35:15)

9. Gap Narrows Between SFR and Apartment Rents

[35:33 - 37:16]

• SFRs rent at a 26% premium over apartments (was ~20% pre-COVID).
• Prediction: narrowing as apartment supply contracts and more shadow inventory hits SFR.

10. Small SFR Owners Poised to Regain Share

[37:16 - 39:34]

• Large SFR operators now just 3% market share; “mom and pops” up to 77%.
• Institutional investors struggle with cap rates; smaller owners more flexible.

11–15: Rapid-Fire Predictions

[39:34 - 43:44]

• 11. Sales volume for apartments picks up moderately as investors move to equity from debt.
• 12. Distress grows but remains a single-digit share of the market—mostly aging, lower-performing stock.
• 13. “Value-add” strategies focus newer (2000s+) and higher-quality; clear divergence between B and C class assets.
• 14. BTR developers will test new concepts/markets (beyond hotbeds like Phoenix, Dallas, Atlanta).
• 15. AI & Centralization tools move “down market” — expect tech adoption in Class B/C assets, not only luxury.

Key Quotes & Timely Moments

• On gain-to-lease headaches:
  "Property managers and asset managers really haven’t had to deal with this before in their careers." — Jay Parsons, (04:01)
• On rent growth:
  “Concessions stay at the highest point ... but if vacancy does indeed improve, we’re going to see some concession burn off.” (33:35)
• On SFR institutional ownership:
  “Big guys with thousand-plus homes ... down from 3% of the market to about 0.5% now.” (38:20)
• On value-add bifurcation:
  “There’s no such thing as B/C ... just Bs and Cs, and that distinction becomes more clear in ’26.” (42:30)
• Quote of the predictions list:
  “The overall theme ... is one of measured optimism, certainly some cautionary things too.” (03:09)

Notable Headlines & Data Analysis

[43:45 - 61:28]

• Explains recent shelter/CPI data “hole” — only a minor technical rounding error.
• Praises Bloomberg/WashPost for highlighting the trickle-down benefit of new market-rate (“luxury”) apartments for overall affordability:
  “If you care about affordability, yes, you absolutely do need so-called luxury apartments.” (58:33)
• NYC rent-stabilized apartment portfolio: $451 million for 5,100 units ($88K/unit!) — “a very tough comp for current owners ... certainly an imperfect comp, to be fair.” (61:04)

Interview: John Burns on Housing Dynamics

[61:37 - 80:38]
Wide-ranging, candid, and data-driven, this conversation covers:

Burns’ Background and Company Mission

• John Burns details his path from consultancy to founding JBREC, now with a thriving research and consulting practice.
  “Here we are, starting year 25 next year.” (45:16)
• Highlights the company’s reputation for housing data quality:
  “Our value add has changed ... now our clients say, ‘Would you sift through it all for me, make it make sense?’” (46:59)

Apartments vs. For-Sale Market: Different Worlds

(48:21+)

• The two industries rarely talk:
  “They’re insanely siloed ... even though one of the biggest threats to apartments is losing tenants to homeownership.” (48:29)
• SFR major players came from all over (storage, mortgage securities, trailer parks, etc.) and “built $10–20B companies while apartments watched.” (49:19–50:10)

Master-Planned Communities Embrace Rentals

(51:38+)

• Massive recent shift: “In 2018, not one master plan developer wanted BTR; now almost every one is planning on doing it.” (52:41)
• Key drivers: Fast cash flow, better tenants (many renters later buy within the same community), diversified business model.

Homebuilders & Rental Product

(55:05+)

• Public builders stepping back from apartment dev (no investor appetite for diversification).
• Privately held builders more likely to hold both.

BTR Sourcing and SFR Demand

• Homebuilders embrace selling direct to SFR/BTR operators—seen as an attractive secondary channel, especially for closing out communities or hitting quarterly targets.
• Many institutional buyers, but “a lot are mom and pops who want to own a few for the long term.” (58:30)

Demographic Megatrends

(61:47+)

• Little to no growth in 25–34-year-olds over next decade; less household formation from that cohort.
• “Far more young people living alone—really, we did not predict this.” (63:50)
• Big growth in 45–54 and 75+ populations—“that’s where the opportunity is ... older people renting, often living alone, are a core driver for product innovation.” (64:30)
• Supports opportunity for better product (one-story, senior-friendly, pet-friendly, etc.).

Immigration & Filtering

• Net migration is a 5:1 ratio (five immigrants, one household), and recent arrivals flock to smaller, non-institutional rentals.
• “If immigrants fill up all the Cs, it pushes some people up into Bs, and up into As—I think the apartment world is right when they say, ‘We’re not seeing this population in our community’, but you are seeing the effect.” (68:43)
• Class C is most exposed to any negative immigration trend.

Premium to Buy Versus Rent

(72:20+)

• The “ownership premium” is now ~$1,000/mo above renting (historically +$400), and only big declines in mortgage rates can shrink the gap.
• “I think mortgage rates are basically exactly where the Fed wants them... So that’s a tailwind for the apartment market for many, many, many years.” (73:43)

2026 Outlook

(74:06+)

• Economic baseline: Modest growth, flat/falling interest rates.
• “Regardless of rental demand, absorptions normalize ... ‘Stay alive till 2025’—we’ll find out who didn’t make it in 2026.” Distressed properties likely to shake out.
• Sunbelt to see correction in rents/prices due to prior over-performance and over-supply; Midwest & Northeast more stable.
• 2026 will be “one of the most boring years in my career,” with low growth in both rents and home prices, but “will vary a lot by market.” (78:33, 78:44)
• “The stronger the economy, the better everyone does.” (78:17)

Memorable Moments

• On class B and C:
  “When a broker says B/C, you and I just know it’s a C.” — John Burns, (71:22)
• On innovation:
  “AI man, that’s going to completely change the world here over the next few years—it’s going to be scary and exciting at the same time.” — John Burns, (47:10)
• On BTR adoption by master-planned communities:
  “Now...almost every single one of them is planning on doing it. So, big change, and they love it.” — John Burns, (52:41)

Episode Structure & Timestamps

| Segment | Description | Timestamps | |---------|-------------|------------| | Predictions | 15 detailed forecasts for 2026 across apartments and SFR | 03:47–43:44 | | Headlines/Analysis | CPI inflation data issue, policy, NYC rent-stabilized asset sales | 61:28–61:37 | | John Burns Interview | Origin story, demographics, for-sale/rental intersection, investment trends | 61:37–80:38 |

Takeaways

• Operators in 2026 must be nimble—rent setting, renewals, and marketing will all face new pressures.
• Supply bottleneck will ease, but hangover from 2024–25 lease-ups will remain, especially in key Sunbelt markets.
• Distressed sales and value-add will focus upmarket; “C” class may lag.
• Multi-decade demographic change demands product innovation, especially for rental homes and senior-appropriate rentals.
• Institutional SFR’s share is leveling off, with mom-and-pop landlords regaining ground.
• Buy-vs-rent premium creates staying power for rental demand, barring a major shift in interest rates.
• AI and centralization will redefine operations in value- to mid-tier assets.

For anyone with a stake in rental housing, 2026 will be a year of sorting winners from survivors. As Jay Parsons notes, the core theme is “measured optimism” with eyes wide open to rapid change—and, as John Burns reminds, “the best product always wins.”