The Rent Roll with Jay Parsons

Episode #68: Carl Whitaker | Q1 2026 Multifamily Update & Outlook
Date: January 22, 2026
Guests: Jay Parsons (Host), Carl Whitaker (Chief Economist, RealPage)

Episode Overview

This episode centers on the Q1 2026 multifamily outlook, offering an in-depth analysis of the latest U.S. apartment market data. Jay Parsons and Carl Whitaker break down supply, demand, rent trends, absorption rates, occupancy, and regional performance for multifamily housing, aiming to equip listeners with nuanced talking points ahead of the National Multifamily Housing Council (NMHC) annual meeting.

The tone is conversational, data-driven, and occasionally tongue-in-cheek, with Jay and Carl sharing insights, reflections on industry predictions, and lessons learned from last year.

Key Discussion Points & Insights

1. Macro Market Snapshot & Recent Trends (03:00 - 12:00)

• Mixed Signals Persist:
  Parsons notes a market with both "green shoots" and reasons for concern—improved rent momentum but caution advised due to mixed data between providers.
• Winter Stabilization:
  Winter "might mark the trough for apartment rents barring a recession" (05:00) but spring will reveal much more.
• Rent Data Divergence:
  • In December 2025, slight positive rent momentum:
    • CoStar: +0.01% MoM (a reversal of 5 months negative or flat)
    • RealPage: +0.1% MoM
  • "Momentum" here means the decline in rents is lessening, not robust growth.
• Spring Is Critical:
  Parsons: "The spring season is going to mean a lot more this year than the past, just because supply is coming down...We need a concession burn-off for the market to get going again." (09:30)

2. Market Fundamentals: Supply, Demand & Occupancy (12:00 - 25:30)

Supply

• Wave Peaked; Big Drop Coming:

  • Q4 2025 was "the last big quarter" for deliveries; over 400,000 units completed annually in 2025.
  • 2026 projected completions: ~300,000 units — lowest since 2014. ("Both CoStar and RealPage roughly agree.")
  • Still, there’s significant "lease-up competition" as properties delivered in '24 and '25 fill up, keeping concessions high (approx. 7%, or one month free, nationally in Q4 2025).

• Regional Nuances:
  Supply will drop below pre-COVID levels in key Sunbelt and Mountain West markets: "Nashville, Dallas, San Antonio, Denver, Salt Lake, Austin, Raleigh, Orlando, Atlanta."
  Phoenix is highlighted as the main market not experiencing as sharp a decline.

Absorption & Demand

• 2026 Prediction:

  • As supply drops, absorption will as well, but not an indicator of danger:
    "As long as absorption exceeds supply and falls at a slower pace, vacancy improves—that's fine." (16:10)
  • Winter numbers are not as telling; more vital to monitor absorption and demand in the spring.

• Top Demand Markets:

  • Dallas/Ft. Worth, Phoenix, Atlanta, New York/NJ, Charlotte, Austin, Orlando, Philadelphia, Chicago, Columbus, Boston, Tampa, San Antonio, Houston — mostly Sunbelt but with strong Northeast/Midwest showings.
  • Lackluster on the West Coast (except Bay Area).

Occupancy/Vacancy

• Wide Variations in Data:

  • Apartment List: Vacancy "highest since at least 2017" at 7.3%. (20:10)

  • Yardi Matrix: "Occupancy has remained firm as more renters stay in place..."

  • Data disparities are often methodological: lease-up counting, stabilized property definitions, availability feeds.

  • Parsons:

    "I tend to look more at the changes than the rate itself... Occupancy rates have been remarkably steady considering the supply wave." (22:55)

• Filtering Effect:
  Higher-income renters "moving up" into newer/lease-up properties, pulling people out of Class C and increasing challenges in the lower-tier segment.

3. Rent Growth & Regional Variances (25:30 - 29:00)

• Supply Drives Rent Movement:
  • Higher rent growth in less supplied markets (San Francisco up 8%, San Jose, NY, Chicago, Midwest/Northeast)
  • Rent cuts most marked in Sunbelt (Austin -8%, SW FL -8%, Denver -6%, Phoenix/Tampa/San Antonio down 4%+)
• Class C Rents in High-Supply Markets:
  • Down over 6% YoY through December.
  • Parsons:

    "The rents are falling most at the more affordable levels in class C...that flight to quality." (27:55)

• Lease Renewal Dynamics:
  • New lease rents have outpaced renewals three years straight — can't continue, “inverted rent rolls” risk if new lease rents don't grow. Spring is pivotal for sustaining revenue growth.

Notable Quotes & Memorable Moments

• On Market Narratives:

  "If you want to look for green shoots, you can find some. If you want to find reasons to worry and fret, you could find some of that, too."
  — Jay Parsons (03:00)

• On Absorption/Supply Dynamics:

  "As long as absorption exceeds supply and absorption is falling off at a slower pace than supply's falling off, vacancy is still improving."
  — Jay Parsons (16:10)

• Regional Rent Trends:

  "Where supply is going in big numbers, rents are falling. Where there's no supply, rents are increasing."
  — Jay Parsons (22:30)

• Flight to Quality Explained:

  "Higher income renters moving up from a B to an A. B properties as lease ups come online, they're moving up. That's pulling people out of class C as class B cuts their rents..." — Jay Parsons (28:05)

• Renewal & New Lease Tension:

  "If we don't get that new lease rent growth, some concession burn-off this spring, that's going to make it really hard to continue to get renewal rent growth..." — Jay Parsons (29:10)

• On Concessions:

  "The average concession value is at jumped to 7% in Q4 nationally... that's basically one month free."
  — Jay Parsons (30:00)

Interview Segment: Jay Parsons & Carl Whitaker (27:10 – 69:01)

Carl’s Origin in Multifamily (27:10 – 29:10)

• Carl joined the industry in 2015 after grad school; discovered "an interesting little niche" that became a career.
• Parsons highlights how the industry’s nuances are often misunderstood by the general public, even renters.

Evolving Perspective on Rental Housing (29:10 – 32:30)

• Carl:

  "The biggest thing is... when you start getting really involved in the research, you start to kind of question some of the headlines that you read, or if not question, you start to scrutinize it a little bit more."

• Anecdotes too often drive the narrative, but rarely reflect the complexity of the market.

Hindsight on the 2025 Outlook—Lessons Learned (32:28 – 38:00)

• Both expected a “gradual recovery in rents” in 2025, but momentum fizzled in summer; retention was much higher than anticipated.
• Strong demand persisted, largely due to “heads on beds” operator focus; a lot of "front door" absorption, too.
• Economic narrative: labor market softened, but GDP and consumer health fared better than feared—demand wasn’t the issue, supply was.

2026 Demand & Absorption Outlook (38:00 – 45:55)

• Supply forecast is straightforward: it’ll be much lower.
  Parsons: “The real question obviously is demand.”
• Carl: Migration (esp. domestic), demographics (“demographic tailwinds”), and wage growth are key demand drivers now, more than job growth alone.
  • Productivity gains boosting economic output despite tepid job numbers.
  • Parsons:

    "There are still good numbers. They’re just not what they were [in the millennial boom]."

Absorption Expectations for 2026 (45:21 – 48:52)

• Jay’s “hot take”: absorption will come down in '26 vs. '25 but that’s not a red flag as long as supply drops faster.
• Carl:

  “I think we’re actually going to see a period sooner rather than later where absorption is going down but rent growth is accelerating and a lot of people aren’t going to necessarily know how to reconcile that story.”

Return to Normal Seasonality? (49:19 – 50:07)

• Both expect seasonality to normalize but “the new normal isn’t going to be where it was pre-pandemic,” with retention rates elevated compared to historical norms.

Rent Growth Projections: By Region (50:14 – 54:12)

• Modest improvement for 2026, <2% nationally, but big regional dispersion:
  • Midwest & Northeast: 2-3% (some even stronger)
  • Bay Area/Northwest Coast: rebounding, SoCal and some Sunbelt still negative
  • Sunbelt: could see a few surprise outperformers as supply drops and concessions burn-off

Potential Sunbelt Surprises (54:45 – 58:50)

• Tampa, Raleigh-Durham, Atlanta identified as likely Sunbelt “rebound” candidates.
• Carl:

  “Momentum is building… If supply on a market goes down 20%... there’s going to have to be some degree of concession burn-off actually showing up in the market numbers.”

• Renewals: Sustaining growth will be tough if new lease/concession dynamics don’t improve by spring.

Five-to-Ten-Year Market Foresight (59:35 – 64:40)

• With the right approach, you can find opportunities almost anywhere, but Midwest markets (Columbus, Indianapolis) are rising in profile and liquidity.
• Sunbelt markets (esp. Dallas) maintain tier-one status, though first-year returns on acquisitions may lag.
• Favoring micro-regional strategy over macro-narratives:

  “The macro story isn’t going to matter as much as the micro story.”

• Submarket identification is critical for both risk and opportunity.

On Urban Investment & Supply Comeback (64:40 – 68:54)

• Legislation and construction cost will determine which cities see earlier downtown/urban rebounds.
• Demand for urban living among young adults remains robust; suburban/urban “momentum” will see some interesting shifts as hybrid work persists.

Supply Outlook—When Will Starts Ramp Up?

• National numbers won’t show much recovery until "start of 2028," but certain markets (like Miami) are showing early green shoots.
• New builds are not distress centers; Class C (lower-end) assets face greater struggles.

Important Timestamps

• 03:00 — Market mixed bag, overview of recent rent trends
• 12:00 — Supply breakdown and regional shifts
• 20:10 — Vacancy/occupancy reporting divergence
• 22:30 — Rent change correlates with supply pressure
• 27:10 — Interview segment starts: Carl Whitaker’s background
• 29:10 — Evolution in understanding rental housing, data vs anecdote
• 32:28 — 2025 lessons learned; economic backdrop
• 38:58 — 2026 demand drivers: demographics, migration, productivity
• 50:14 — Rent growth regional forecast
• 54:45 — Concession burn-off as a driver of recovery
• 59:35 — 5-to-10-year market positioning
• 66:18 — When multifamily starts return

Concluding Thoughts

The episode conveys cautious optimism for 2026, with most fundamentals stabilizing as the supply wave recedes. The coming spring and summer leasing seasons are set to be crucial indicators. Regional performance will diverge; after a bruising 2025, certain Sunbelt metros, along with resilient Midwest and Northeast markets, may outperform expectations. The key for operators: track local supply, demand, and concessions closely — the new multifamily normal will be anything but uniform.

For further data and recaps, find Jay Parsons on LinkedIn, X, or visit jparsons.com.