EP#68 Carl Whitaker | Q1 '26 Multifamily Update & Outlook

(upbeat music) Welcome, it's episode number 68, 68, of the Rent Roll, your podcast on all things rental housing, apartments, single family rentals, and build to rent. And after two weeks talking SFR and policy issues, a potential ban today, we're digging into apartments, back into apartments. It's our Q1, 2026 multi-family update and outlook, the latest data and expectations for the US apart market, timely topic of course, as we gear up for the industry's biggest, annual get together next week, the national multi-family housing council's annual meeting. So hopefully we can maybe give you some talking points to take with you to the parade of meetings that I'm sure you have if you're going. At least we're gonna do our best to help you anyway. After we do all that, we've got one of the best joining us today, my good friend, Carl Whittaker, Chief Economist at RealPage, the pride of East Texas, and one of the best multi-family researchers in the business. Today we're talking mostly about fundamentals, supply demand, occupancy rent. Next week we'll dive more into capital markets and multi-family capital markets in particular. Also debt and distress, deep dive there. And we got a great guest next week as well. So stick with us for that to be a good way to end your NMHC week. And then in a couple of weeks, we'll circle back on NMHC's annual meeting. We'll share some takeaways from the week, the buzz, the vibes for all you who missed out. And for those of you who just stuck in a conference room the entire time and want to recap. So we'll get you, we got you, okay? All right, last thing before we jump in. By the time you're hearing this, you've probably already heard President Trump's housing plan that is supposed to be presented this week in Davos. We'll be reacting to that on LinkedIn, on X, probably on our newsletter at jparsons.com. So you find it there. Also on my website at jparsons.com, I just shared a piece, the 11 myths about single family institutional rentals. It builds on last week's podcast, which was 10, this one will be 11, so you go bonus one. But more importantly includes detailed sourcing and relevant links to relevant data and academic research. So you can find that at jparsons.com and hopefully be better equipped to combat all those runaway narratives with some facts. All right, for we jump in, I want to give a big, big shout out and thank you to our sponsors. First and foremost, big thank you to JPI, leading apartment developer of the state and purpose to transform building enhanced communities and improve lives. Check them out at jpi.com. And also look for the JPI team in Vegas at NMHC. Also a big thank you to Madera Residential, leading apartment owner and operator based in Texas, expanding into the southeast. Check them out, maderaresidential.com. Okay, we kick it off. As always, with here's a chart. We got a bunch of charts for you watching video. And if not, we will walk you through it. This segment is brought to you by Mason Joseph multifamily finance, the number one FHA construction lender in the Southwest for a reason since 2016. Mason Joseph has closed as many FHA construction loans in Texas and surrounding states as the second and third place lenders come bind, according to my friends there. So check them out, Mason Joseph. All right, here we go. So before we dive into the day, let me just quickly recap where I think we are. Okay, the latest data, I think it's gonna show more of the same mixed bag of signals. If you wanna look for green shoots, you can find some. If you wanna find reasons to worry and fret, you can find some of that too. But I'm gonna give you three things. I think we get safely include here. Number one, you know, obviously what a soft the normal summer and fall, but winter feels more normal so far. Some seasonal backtracking, but nothing dramatic, nothing great, nothing dramatic. But number two, I think there's a case team made that the winter might mark the trough for apartment rents, barring a recession. And I think there's some data to support that. And number three, just to say the obvious, we're gonna know a lot more in the spring. You know, I'm always nervous and apprehensive, look too much in any winter numbers. I've looked to the slower leasing season. So you don't wanna look too far into that, but we're gonna know a lot more when spring season, leasing season kicks into gear. And I think the spring season is gonna mean a lot more this year than the past. Just 'cause supplies coming down, there's vacancy to build it up. We gotta get through all these lease ups. We need a concession burn off for the market day at going again. So the spring will tell us a lot. But here we are right now. I like what CoStar wrote on their website and their news release. They put this way. They said supply pressures remain elevated, tempering momentum, but December data indicates a possible gradual return to more typical rent growth patterns in 2026. And I think that's a fair take. And to back that up, both CoStar and RealPaid did report improved rent momentum in December. Now, it doesn't mean growth, by the way. Momentum means that it really just means that cuts aren't as bad. It's less negative. For December, actually this was positive. CoStar reported a very slight positive, 0.01% month over month increase. So early time I meant, I'm not year-of-year is less negative for the real page data. But month over month, 0.1% increase for December. And CoStar said that is a reversal of the five previous, I'm sorry, a reversal of the previous five consecutive month trend of flat or negative monthly rent change. And then CoStar also reported month or month rent gains in December for every region except for the West. RealPaid showed modest momentum in the last two months of the year. And if that holds, it would suggest that October 2025 was the bottom for rent. So we'll see. I always get slightly different data by providers, general trends, seems to be holding up. All right, so let's break down the some more data. We're going to run through the key KPIs real quick, supply-demand occupancy rent. We'll start with supply. All right, so Q4 2025, that looks to be our last big quarter for deliveries, okay? We peaked in 24, still had a lot, spilling in 25, so it was the first half of the year. It dropped off, and I mentioned this before. I think we put a lot of emphasis on the drop off, but didn't really emphasize enough that 2025 was still a lot of supply. We completed 4,000 units in 2025. That still would be the highest number for any year, going back to the mid 1980s if we take out 25 and 23. And so by relatively speaking, it looks lower in reality, it was still a big number. But now we're past that, okay? We're past the peaks. Now we're in the 2026, starting in even here in Q1, fewer deliveries are going to hit. For the year, we're going to be somewhere around 300,000 units completing. That should be the lowest level since 2014, according to both co-star and real page. They have different numbers completing. Co-stars under 300 real pages are slightly above. But either way, that compares to the peak of 600,000 in 2024. And as I mentioned earlier, we had more than 400,000 last year. So lots of those supply numbers are dropping off. But remember, we had that big wave of supply that completed in 24 and 25, still working through these prolonged lease-ups, has keeping concessions high. It's putting pressure on rents. So that remains a factor going into the spring. So fewer deliveries, but still a lot of lease-up competition for the time being. Now, looking at where supply is dropping off, is dropping off in some key spots. If those of you can see the screen, I've got a chart here that shows you supply in 2026, compared to pre-COVID numbers in 27, 2019. And we're going to be not just getting lower. We're actually falling below pre-COVID numbers in key places like Nashville, Dallas, Antonio, Denver, Salt Lake, Austin, Raleigh, Orlando, Atlanta. The only place that we're really not going to drop off meaningfully below pre-COVID is some of their places around flat, but the key ones really phoenix. That one's still about a 1.5% above pre-COVID norms. Most of that, of course, is concentrated in the West Valley. I think there'll be a big difference eastside versus westside there. All right, absorption. Okay, I talked about this in the 2026 predictions. I mentioned we're going to see absorption numbers come down. And a lot of that's just because supply's coming down. And supply did kind of gradually come down throughout 2025. And so we saw absorption come down a little bit as the year went on as well. So again, don't panic about those numbers. So long as absorption exceeds supply, and absorption's falling off at a slower pace and supply's falling off, that means vacancy's still improving. That's fine. So I would make too much about the drop off in Q4. Real pages have a slightly negative number, co-starred a positive number. But either way, we are seeing a moderation there that just ties, there's less available to absorb. The spring, though, is going to tell us a lot more about where absorption is trending. So I'm not looking too much in these winter numbers. Again, some seasonality, unless the numbers are really bad or really good, you don't want to look too much into that. But for as far as I see so far, it's playing out as expected. All right, where's the demand going? Pretty much the usual spots. Top 15 places include Dallas for Worth, Phoenix, Atlanta, New York, Northern New Jersey, Charlotte, Austin, Orlando, Philadelphia, Chicago, Columbus, Boston, Tampa, San Antonio, and Houston. So mostly the big sum belt, three big sum belt markets above 20,000, but also some good numbers and some of these key Northeast and Midwest markets. Not seeing the West Coast on the top 15 right now, a little bit softer in some of those spots, the exception of Bay Area, where of course, there's just not as much available to absorb. All right, now let's talk about vacancy. Now this is one of the interesting topics because if you, your perceptions of vacancy really depend on who you ask. We see some wildly different reporting on vacancy. I'll give you two extremes. Apartment list, I mentioned this previously. Their data was recently cited by CMBC, showing a record high vacancy. And of course, their data only goes back to 2017 and department list said that. CMBC kind of buried that deep into the story. But here's what department list said. Our national vacancy index, which measures the average vacancy rate of stabilized properties in our marketplace, sits at 7.3 to close out 2025. This represents the highest level since at least 2017, which is when we started tracking occupancy. All right, on the flip side, Yardy Matrix says, one notable, one notable bright spot is occupancy, which has remained firm as more renters stay in place and fewer transition into homeownership. This resilience also reflects owner strategy to prioritize retention through lower renewal increases and concessions. And we see this across other data fighters as well. Coast starch shows vacancy up 70 bits, apartment list shows that they can see up 50 bits, ratics up about 30, real page, up about 20. Yardy is relatively flat. But they don't that vacancy and the already data has improved a little bit for upper tier stabilized product. It fell a little bit in the older tier product. And that, in my opinion, is likely some filtering at play as renters move up market, continuing the flight to quality that we've seen in this cycle. And co-star show the same, by the way, which is absorption has been disproportionately heavier up market versus in the lower tier product. So anyway, who's right? Who's wrong? Well, they're probably all right. It just depends on methodologies. I think a lot of this divergence just traces a different methodologies. It seems like occupancy should be relatively a simple thing to track, but it's not. And I don't want to get too far in the weeds here. But I will just tell you that occupancy can vary a lot, depending on how different data providers count leasups versus stabilized. How stabilized vacancy is measured? Well, what role leasups play if at all? And when at what point they count as stabilized and then add it into the stats, there's no standard. That can vary based on provider. And also how or if vacancy is being derived from availability feeds, that can also really-- there's a lot of methodology where it that goes into that as well. And so I tend to let more of the changes than at the rate itself. But I think bottom line that I want to get too far down the rabbit hole here, I think there are some real pockets of vacancy challenges, particularly for leasups and for the lower tier product in these high-supplied markets. Do the filtering effect it just talked about? But overall, I think occupancy rates have been pretty remarkably steady when you consider the 50 year supply wave. We just went through from 23, 24, and 25. And we do see that in the REIT data as well. I've shared that previously high occupancy rates, but coupled with weak rent trends to compete for that demand and keep occupancy elevated. So looking at rent change by market, it's still very correlated. Where supply is going to big numbers, rents are falling, where there's no supply, rents are increasing. And so we see big rent increases still, of course, in San Francisco, which leads the nation, about around 8% also strong rent growth in places like San Jose, New York, Chicago, and other places across the Northeast and the Midwest. And of course, we see in rent cuts still across the higher-supplied markets in the Sunbelt, down 8% in Austin, down more than 8% in Southwest Florida, also down more than 6% in Denver, down more than 4% in places like Phoenix, San Antonio, and Tampa. So again, big variance. Let's look-- one other thing I'd point out is it's not just about coastal versus Sunbelt anymore. We're seeing some variances even on that basis. You look at-- I mentioned the West Coast, San Francisco Bay Area, San Francisco, San Jose, we're seeing some real strength. Seattle's been a bit softer. Los Angeles still can't find its footings, actually, backtracked a little bit. As has other parts of California. You look on the East Coast. New York is still strong. DC and Boston, obviously, backtrack in the second half last year. Now, the good news is they've seen to be stabilizing. I think DC in particular is we get past the doge cuts and the federal government shut down. I think that one is showing some upside again, particularly in northern Virginia area. But it's not really picked up back up, but it's not gotten worse. And Boston, I think we'll have to see if that one plays out, given its exposure to international students and research funding, long term things will be fine, just some timing. And in the Sunbelt, I think we're going to see this year a real divergence between some markets that are showing signs of earlier recovery. We talked about previously in places like Atlanta, maybe Dallas, maybe suburban Nashville, maybe parts of Florida, and other markets that may take longer to recover. So I think we'll see a few markets surprises this year in the Sunbelt, German backup, the leaderboard, and then, of course, the Midwest remaining pretty steady. One more thing, a couple more things on rents. This next chart will show you class C apartment rents in high-supplied markets. So this is only looking at the high-supplied markets. This isn't a big part of the story. I still see media coverage that gets this wrong. We're talking about, hey, all this new supply has only benefiting upper-income renters. That's not true. In the high-supplied market specifically-- I've talked about this so many times, all the research around this, but here's latest data-- the rents are falling most at the more affordable levels in class C. Class C rents in high-supplied markets are down more than 6% year-by-year through December. That compares to class A, which was only slightly negative in class B, which is around 3%, negative. And so that flight to quality, renters moving up market, I've said this just a million times. High-income renters moving up from a B to an A, B properties-- as leased ups come online, they're moving up. That's pulling people out of class C as class C cuts their rents. You're relatively speaking, high-income renters in class C now have more options than maybe a better location, maybe a slightly newer-ventures property. Their income has probably gone up more than rents based on national averages, at least. And so that's creating challenges in class C, which has to cut rents more to pulling people who previously didn't qualify. So we're seeing that play out. But only in these high-supplied markets, where there's no supply, a little supply, class C rents are still increasing, which, again, tells us it's all about supply. And then the other thing I mentioned this in the 2026 prediction-- so I can spend as much time on this now. And that is the difference between new leases and renewal leases. So just to remind you, we have three straight years when new lease rents have grown faster than renewal rents that continued to 2025. You can't sustain that. As we burn down the loss to lease, we now face potential gain to lease or renewal-- I'm sorry-- and potentially inverted rent roles, which basically means you're sending out renewal offers above what you're advertising for your new leases online. And your renters see that. And that, even if your renters can afford it, means they're going to push back on any kind of renewal increase at all, in some cases. So that's a nuanced topic. I had a lot more on that in the first episode of 2026 if you want to dive in more. I also talked about it on LinkedIn. But inverted rent roles and gain to lease are going to be a bigger theme if we don't see some new lease rent growth this year. Sorry, this spring-- that's why spring is so important. If we don't get that new lease rent growth session burned off this spring, that's going to make it really hard to continue to get renewal rent growth, which has really been the keeping revenue growth steady in these higher supply markets. That's going to be a challenge if we don't see that happen in the spring. So we'll see. And on that note, lastly, concessions. The average concession value is that jumped to 7% in Q4. Nationally, that's the highest. That's basically one month free. And it's a national average. And it's obviously more than that. It's these high supply markets. That is the highest since the early 2010s coming out of the pandemic. So if the spring leasing season shows some momentum as supply drops off, concessions start to burn off. They don't have to burn off all the way. But even modest concession burnoff could lift up effective rent growth. And that could be a big part of the story this year, as it was in the early 2010s coming out of the pandemic-- I'm sorry, the pandemic-- the great financial crisis in the early 2010s, it was concession burn off that led the initial recovery in effective rents. Because again, effective rents include that concession. All right, so then one more quick note here. We're not going to spend a whole lot of time talking about capital markets. We're going to do more of that next week. But it's just really quick touching on this. Apartment sales, the latest data, this will be through November. We are on a trailer-to-month basis. Total sales dollars is tracking back to the lowest levels-- I'm sorry, the levels that look more like 2017, 2018. So we're coming back a little bit from the trough of '24. 20 highs picked up a little bit, but still down from where we were in years prior. And then, but even the total number of transactions, that number is even lower. It's come back a little bit since 2024. But if you take out last year, right at the lowest level since 2014. So that recovery is starting to pick up a little bit, but it is very gradual. Meanwhile, cap rates continue to hold steady on average in the low to mid-fives, depending on what you have and where it's located. I'm going to get much more in capital markets next week. We're going to focus on fundamentals today, a lot more coming, particularly talking about debt and distress next week. So stay with us for that. But next up, it's rental housing trivia. All right, today's trivia is presented by Landing, a full service furnished housing partner helping operators drive incremental NOI. Simply, landing turns vacant units into revenue. Learn more at hellolanding.com/partner. Goodbye, vacancy, hello landing. So to check them out, hellolanding.com/partner and do get that partner in theirs. All right, so today's question. Of all US farmer construction starts in 2025, what percentage were affordable housing? Was it A, 9% B, 14% C, 19% or D, 24% again? What% of all apartment starts were affordable housing in 2025, according to Yardi Matrix. So give us some thought. We'll come back to that in a bit. But first, in the news. All right, in the news this week is sponsored by Authentic. If you've got a property that's underperforming and you can't quite figure out why, check out their multifamily leasing and marketing audit. They'll dig into your pipeline, leasing funnel and comps and tell you exactly where things are breaking down, plus strategies and how to fix it. Listeners of the pod get 50% off. So head to AuthenticFF.com and click on the banner to learn more and claim the offer. All right, so we got two headlines for you this week. The first one, it's a press release from the business wire. It says, "Invitation Homes acquires a rezi-built to enhance development capabilities and deliver more housing solutions for American families." Okay, so some big news. Invitation Homes, the big SFR company, the biggest of our REIT, it's jumping into the development business with the acquisition of rezi-built. Now, of course, imitation has been active in new construction for years now, but through pre-purchase agreements with builders and other methods. So this gets invitation more directly in the development game. It may also be a good diversification hedge against any potential regulatory restrictions that come with maybe preventing home builders from selling homes directly to SFR companies like Invitation. Obviously, it was something that FHFA commissioner, our director, Bill Pulti mentioned as a possibility on CNBC. We'll see if that plays out, but it's worth noting that Invitation did say in their press release that they've been looking into this strategy for a while now and even signaled back in that their investor day, November, a goal of expanding into development. So this probably is not simply a reaction of Trump's announcement and where it was strategic play that gets them into development just like their fellow SFR-REIT AMH. So Resi-built was founded in 2018, Ted Corden Atlanta. They've built 4,200 homes in Georgia, Florida, and the Carolinas. So we'll see what presumably Invitation could expand them to the imitations other markets as well. Second headline, this is from Graystar. It's Graystar's 2025 design survey showing fitness, wellness, and social spaces, lead shifts, and renter priorities. So every year, Graystar surveys their apartment residence. In this case, our rental housing residence, I got to assume includes BTR as well. It's from a survey of 137,000 Graystar residents. Top five amenities, according to Graystar renters. Drumroll please. It's walk-in closets, large windows. So the abundant natural light, fresh air ventilation. Number four is covered parking or garages. Number five, fitness centers, okay? So that may seem a bit dated, but fitness centers have actually not been on Graystar's list of the top five since they started the survey. And they said a 3% of renters now consider fitness centers important or essential, pushing them into the top five for the first time. 68% of renters report using them regularly with the highest demand for free weights, 24/7 access, and for water stations. So very interesting. Also of note, Graystar said residents are decreasingly willing to pay for sustainability features. They said renters willing this to pay extra for sustainability declined by an average of 24% year over year. So there you go. You know, I'll tell you what real quickly here. I think the worst thing for the sustainability movement in building and construction has been low-flow showers. That one thing is a buzz killer for sustainability. Particularly, we have to use that shower every day, living in a apartment. And spending more time in the shower, trying to get gonna get washed off. And who knows, you can save water after all that time. So I have an idea that I've been willing to implement. And somebody could kind of figure how to do this. It'd be called lead certified minus low-flow showers. I think it should be its own category. And I think it'd really sell, but I digress. All right, let's get back to today's rental housing trivia question. The question was, of all US apartment construction starts in 2025, what percentage were affordable housing? Was it A, 9%, B, 14%, C, 19%, D, 24%? And the correct answer is C, 19% of apartment starts were affordable housing in 2025, according to Yardy Matrix. That is not surprisingly the highest share on records since Yardy started tracking it in 2014. It was hovering around 13 to 14% in 2020 to 2023. It jumped in 2024 to just under 18%. Just under 19% I should say, it's even higher in 25. Now, it's not a big surprise. You know, all the headwinds facing construction right now. But it's worth noting that actually Yardy showing us that affordable housing starts are down to, it's just that affordable housing is down a little bit less than market rate starts. And so affordable housing rates that's a larger share of the starts right now. But it's worth noting that affordable housing developers do face real challenges too, particularly that rents have not kept up with AMIs. As you know, with light tech, low-income housing tax credit, your rents are set based on the area meeting income. Wage has been growing faster than rents. But the rents have not been able to keep up because of all the downward pressure from rents of all this new market rate supplies. And all of a sudden, you have market rate properties without don't require all the paperwork of a light tech to lease that have comparable rents to a light tech deal. And that creates a real challenge for these light tech operators and developers. Now, from a societal perspective, that's a good challenge in the short term. I think in the long term, it's a bad challenge because over time that gap's gonna wind back out market recovers. The market rate properties can be eager to push rents back up again after three years plus of flat to negative numbers. Light tech rents are locked in at a certain percentage of AMI. So we need to keep it going, but it does get challenging in an environment like right now. So bottom line, affordable housing still challenging. You get starts done, but starts going, I should say, but it's not quite down as much as market rate. Next up, it's time for today's interview, sponsored by funnel, the AI and CRM software, trusted by four of the six major reads and many more leading operators like BH and Cortland to learn how funnel can help your properties centralize operations and automate everyday tasks. Visit funnelleasing.com. All right, my guest today is a longtime friend of mine. He is the pride of East Texas and one of the nicest guys you'll ever meet in the multi-family world. He's also a great analyst and researcher too, Karl Whitaker, chief economist at RealPage. So Karl's kind of to join me in studio. Here's my conversation with Karl. (upbeat music) All right, welcome to the interview portion of today's podcast and I am absolutely honored to welcome in my friend of many years and the chief economist at RealPage, Karl Whitaker. So Karl, thanks so much for being here in person in studio. - Yeah, for sure, you know, whatever the people call into sports radio talk and they're like, first time listener alum, or first time scholar alum time listener, it's gonna what I feel like right now. - Well, we and I did many of these together in Richardson at the LJHQ over the years. So a little bit smaller set up here, but it's great to do this again with you. So Karl, for those who don't know every, a lot of you'll know you, but maybe not know all of your story. So back, let's see, what year was this? You applied for a job at a little research firm called Axiometrics. When was that and what led you to apply for a job at a apartment market research about all things? - Yeah, it is kind of an interesting little niche to fall into. So I guess it would have been 2015, is when I started my search, it would have been late in 2015 and 2016, I started getting applications out, but I was working for, so this was right out of grad school. I was working for while I was finishing my degree, a economic development consultant down in Dallas, small boutique firm called Catalyst Commercial, and really what the company's job was, was to help cities kind of find best and highest use for undeveloped parcels of land, or hey, we've got a 30 year comp plan we're working on as a city. Tell us what we need to do with this quadrant of town. Do we build apartments, do we build office, do we build industrial, so on and so forth? So we did a lot of that market research, and we were subscribers to AxiMetrics at the time, okay, I could take it some of that apartment data, and I was just poking around one day looking at jobs and saw that AxiMetrics had posted something for, I think it was Toddle Market Research Analyst, if I remember right, or no, it was real estate analyst, that's what it was, it was real estate analyst, and at the time I hadn't even put together that AxiMetrics was just apartment market data, 'cause we were also using co-star at the time too. So interviewed with the AxiMetrics team and Azure aware, but really good group of people, and I guess the rest of the history is like, "Oh, shut up to her friend, Jayden." Now at Radix, I tell people this all the time, when people ask for my story is that one of the things I love about this space, mental housing, is that I think it's so misunderstood, and I felt this myself, I experienced this, like I lived in an apartment, like a lot of people did at some stage of their life, and you just think, I understand that, it's tangible, I've experienced it, but because of that, I think it leads to maybe some overconfidence on what the sector really is, what who renters are, based on your little experience versus the broad spectrum of who lives in 25, 28 million apartments across the country, plus the 15, 20 million single family rental homes across the country, and it's just a lot more nuance than it most you'll think. And so I always tell people, the story I always share is the first of many, many things that I experience, kind of like a perception versus a reality, was I was with, you know, MPF research, you know, early competitor of Axio, pretty much a real paid as well, and seeing like these occupancy ranking, seeing Pittsburgh was the most occupied market, I mean, no one's in one of Pittsburgh, like what's going on? And of course, obviously, it's all about supply and demand, very little supply. So I'm curious for you, I was like, "Ascio, it was this question, "how is your perspective of rental housing, "and/or renters, how is it evolved, "and what ways would that have surprised "the pre-axio Karl Whitaker?" - Sure, yeah, no, it's a great question. I think the biggest thing is, once you, and I'm sure this is true, if we're just about in the industry, but when you start getting really involved in the research, you start to kind of question some of the headlines that you read, or if you have a question, you start to scrutinize it a little bit more, and I don't have to say that headlines are just, inherently nefarious, I think it's just a lot of, like I said, misunderstood and misrepresentation. I think the biggest thing, to me, one of the biggest things that stands out is how often anecdote proceeds everything else. You know, the data might not support the anecdote, but the anecdote makes for an interesting story. And I think that that one's cool. - You get two anecdotes, you got a trend. - Yeah, exactly, like we interviewed two people, therefore we could talk all this trend. So for me, I think the biggest thing was, you know, and again, I'm not saying that it was like dispelling myths that were in the headlines, it was just kind of this interesting little shift to say like, "Oh, there's an entire industry behind this, "and you start to understand some of the inner workings, "if you will, and understand a little bit more about the business." And I'm almost kind of lacking it to, you know, like everybody purchases a car at some point, whether it's a new car or a used car, but you don't really have a lot of experience with buying a new car because it's something you only do once every five-ish, maybe even longer years. And rental housing is kind of that same way, where you know, you're really not going through the process of leasing all that off then, I don't think. So, you know, it's just, it's after seeing some of the data and seeing how things work and understanding a little bit more, I think that's probably been one of the biggest perception shifts, I would say. I think the other thing too, and we're seeing this more and more, we're even seeing this in political headlines now, is how much of a need rental housing is, and why it's so important. And you do a good job of this, of course, of like touting that and why it's important, but I think that's been another perception shift. Now, granted, this was 15 years ago that I was living in an apartment, or starting that process. Yeah, I think it's funny for homeowners, sometimes they, well, everybody should be a homeowner. Well, that's easier said than done. So, you know, we need more for sale homes as well, but obviously rental housing plays an important role, like you said, Carl. All right, so let's jump into the market. You know, one of the blessings and curses of our jobs were always asked to make predictions and crystal ball things, that kind of stuff. So, I wanna just go back to a year ago. If you and I were sitting here a year ago, the mantra was survived till 25. And a lot of us, and myself included, I thought we would see a gradual recovery and rents in particular, you know, 2% or so. That obviously didn't happen closer to zero. But we did see really big demand numbers. And of course, when we talk about demand, we're really talking about absorption. And so, Carl, as you kind of go back and think about what you were saying a year ago, and what others were saying, kind of consensus thinking, what did we all get wrong? And were there any kind of clues at an hindsight, maybe we should have paid more attention to? Yeah, it would always be nice to have the benefit of onset. And real quick, too, I actually will echo something you said there about building momentum in 25. The first three or four months of the year, the data was actually showing that 25 was building some positive rent growth momentum. And it wasn't, you know, in line with where it was pre-pandemic, but if you know, it just simple month over month rent change, the first four, maybe five months of 25 were stronger than 24. So that momentum was building. It was the summer that really crushed it. Kind of put a con� on it, which maybe we can talk about that in a little bit of whether that's the new norm of seasonality being shifted a little bit or if it was just a 2020, kind of economic noise thing. But yeah, so for me, I think the biggest thing that surprised me was how prevalent retention remained. I thought we would have saw more turnover. That's the one thing I wish I would have had more hindsight 'cause, you know, we went into the year saying, you know, not to say that retention would totally plummet, but it was at 53, 54-ish percent going into the year and it went to 55, 56-ish. I mean, it's amazing. A non-insignificant shift in the number of residents electing to renew their lease, which I'm sure some of that's operational strategy and operationally driven. But, yeah, heads on beds, that's everybody was, that was the theme for 2025 for sure. Totally, yeah, and I think that's kind of how that manifested was, you know, just let's keep the ship stable here, focus on heads on beds. That showed up in the occupancy numbers, which roundabout way of getting to it leads to the demand numbers. And I think one of the reasons why we saw such strong demand. But having said that, it wasn't that just the retention numbers were strong. We were actually we're seeing that there is true genuine absorption of apartments from a new lease side of the perspective. So, it's just, I think that dynamic just shifted a little bit of retention was kind of the preferred way of going about occupancy capture last year. But there was still some front door absorption happening too. Now, I think the other thing that I wish I would have had more benefit of knowing, excuse me, this time last year too, was what would happen with the economy. You know, there was a lot of economic noise going into 2025. A lot of unknowns. There's kind of been this unwetting of what's happening with the labor market and some softness there with the general theme of overall economic growth. It's actually still in pretty good shape. Yeah, GDP in it. And we're talking mega macro here. But GDP numbers look pretty good. Consumer delinquency or debt delinquency really isn't skyrocketing the way that people thought that it would. So, I think there's actually some economic strengths and maybe more than a lot of people are willing to focus on. Because people are so keen and sometimes justifiably so to look at just the job growth number in the vacuum. Yeah, I agree. I think whenever things are softer than expected, like in the rents in this case, the tendency is to want to think it's got to be a demand side issue. And it really wasn't. And we've seen this across data regardless of which data fighter you use. And if you looked at household formation numbers or renter household formation safe in the census, like all those numbers are actually good. And so, and even the occupancy numbers, I believe that your data is going to show occupancy down to what 10 or 20 bits for the year. And we've seen similar things from the REITs, obviously, but it's came at this expense of new lease pricing. And my sense of it is a lot of it, I don't know that nationally we're at less than 1% rent cuts. I don't think that stimulates a lot of that demand. But what it really was about is individual properties competing with each other to capture a demand that was going to be there even if you didn't cut that ramp. But you're just trying to capture your share of that demand in an environment there's a lot of supply. And so, Carl, one thing, as I look back on it, I think I probably didn't talk about enough was that I met a lot of groups last year saying, oh, look, supply is going way down in 25. And it was, it's down, I don't know, 20% or whatever. But I think what we didn't emphasize enough is that 2025, if you take out 24 and 23, still it had been the highest supplied year since the mid 80s. It was still a lot of supply. And plus, you're still leasing up a lot of stuff from 24. And some of that went through that year two hangover you're trying to fill up while you're still trying to, while you're also the same time trying to retain your first leases. So, I don't think I personally emphasize that enough, which is that, yeah, supply is down, but it's still a hyper high supply situation. And so, if I go back in time, that's one thing I would have said differently. Yeah, I think that makes sense. And I think the timing of supply delivering versus how long it takes to adequately absorb all that. I think that's something that us research minded folks would have probably positioned a little bit better. Last year myself totally included there. Absolutely. All right, well, lesson learned. So, here we are in 2026. You know, one thing, you know, I tell this all the time, so there's probably almost every week in this podcast. I mean, the forecasting is hard. Easiest thing to forecast is supply. Supply is just starts being pushed forward, especially you look at the next 12 months. So, we know pretty good certainty, with very good certainty that there's going to be a lot less supply in 2026. Maybe off by, you know, a relatively insignificant number, but supply is coming down significantly. So, the real question, obviously, is demand. And again, I want to be really clear in this, because I know you and I both sell this a lot of people, like when we talk about demand, we're talking about absorption, which is renter household formation, the net change number of occupied units. And so, Carl, let's dig into this a little bit. This is, I think, again, the big question for 26. That's going to indicate, that's going to drive what happens with rents as well. How are you thinking about absorption and demand drivers for 26? Yeah, it's a fun thought exercise, because again, I think so many people are so deeply wedded to that idea that demand has to come from job growth. And I think you even, don't quote me on the year here, but I want to say in like 2017, you had put out some research that it was like, look, job growth matters, but it's not the end all be y'all, or predicting rent growth and demand. And I think that that still holds true, even more so true now, for a number of reasons that we won't get into. By the way, I'm going to shout out to Sheen Squires, who worked with me back in the day. It's now a wizard real estate data science guy. He helped me with that research, but go ahead, Carl. Yeah, no, and it's good research. So yeah, she said, Shane, yeah, Shane, that's the part of your day. But yes, Shane, if you ever watch this, shout out. But I think a lot of people look at that job growth story as like, well, if job growth is happening, where is the demand going to come from? Now, having said that, it is a totally fair question. And I think this is where you start getting into things like migration, being a key driver. Now migration is in this little bit of a kind of a readjustment period. I would say, I don't think that anybody thought that the 2021 to 23 sunbelt migration, that was a sustainable level of migration. But when you look at the data, there's a number of markets in the sunbelt indicator that are still getting positive domestic migration. And I think it's important to delineate domestic versus international, because a lot of times the migration numbers just capture the overall. If we are seeing slowing anywhere, understandably, it's on the international migration side of the equation. So I think you still have some demographic-- I'm sorry, some migration components informing demand. I think another thing that gets discounted often-- and I can understand why it's discounted, because it is such a big nebulous topic. It's something that's hard to put numbers on often. But demographic tailwinds still remain in place for-- yeah, housing at large. I mean, not just the rental housing industry, but demographic tailwinds are still in place. You still have a huge chunk of folks that are living at home with mom and dad that haven't necessarily watched into the market. That's some untapped demand potential, even those that are currently in the market. That's some demand that can happen outside of the job growth number itself. I think the other thing, too-- and this is maybe a little bit more of a-- we're still not 100% sure what this looks like long-term, but there's a lot of data that shows productivity gains are increasing significantly. And the numbers I looked at this morning were showing that 2020's decade productivity gains are about twice as much as what we saw in the 2010s. In other words, the output of the economy is stronger than what the job growth number would say on its own. And I think what that translates to secondarily is wage growth. And that's been one of the under accounted for. And I think you've done a good job of accounting for this. But one of the under accounted for strengths in the industry is that wage growth remains strong. I think it will continue to remain strong. It anything softening labor market fundamentals in some ways could benefit wage growth. And what I mean by that is just you're going to have a lot of competition for certain skilled employment sectors. And also for some sectors that we've seen for a long time, just don't have a lot of depth of labor out there. So I think that going into 26 wage growth will continue to be a really strong demand tailwind for the industry. Yeah, and you stub the issue of boomers. Number of boomers retiring versus the becoming the workforce. You mentioned demographic sales at tailwind. I think a lot of people miss this is like, it's yeah. Like it's not like the 2010s where you had that. You had this huge, the millennial population where there's just just raw growth and number of young adults. And yeah, the number of people entering their 20s is much lower than it was back then. But these are still good numbers. They're still high. They're just not what they were. And I think that remains a tailwind for the next 10 years for apartments and longer for SFR, BTR. And so there's still some things there. And obviously you mentioned job growth. I want to caveat a little bit. You're right, we did do some research on this. There's not a great relationship between everybody's looking for like, hey, what's the jobs in a man ratio? There's not such a thing as one. There's no constant. So we do overstated. However, jobs still do matter. And specifically, Carl, you one thing we get asked about a lot right now. I'm sure you do as well, is the young adults coming out of school. And I look at it like, yeah, yes, there's the unemployment rate among new college graduates is lower than it's been, I'm sorry, higher than it's been in the past. But I think a couple of thoughts there. Number one, that number's still in the single digits. So that means still 90% of college graduates are finding jobs, which is good, right? And then the number that are not, that represents some pent up demand potentially as those people hopefully get employed. And so that's, but I think some of you will kind of forget. So yeah, the numbers higher than normal. We're talking about like, I forget the exact number. Seven or eight percent. There's still a lot of people getting jobs. Some are probably living in mom and dad by the way things out a little bit. So Carl, like putting all that together, obviously a lot of mixed signals and whatever happens in the economy, that's gonna indicate a drive a lot of what happens in the housing market as well. What are your thoughts on how absorption really shapes up for 26? I think we'll see, if we're looking at just the number itself, I think we'll see the number be a little bit front loaded, partially because the supply numbers are gonna be a little bit front loaded. So I guess where I'm heading with that, is if you look at the fourth quarter, 26 numbers, and I'm making up a number here, if they're negative 50,000, don't focus on that, is a, oh my gosh, the number is negative, that's terrible. It's really just more so a reflection of the fact that supply has cooled off that much too, in seasonality, in seasonality. So, I think the beginning, six months of this year, and really that, like we were talking earlier, that March, April, May period, it's gonna be particularly telling. But I think absorption's gonna be in good shape. I don't see anything that says that absorption's gonna be totally derailed. There are certainly headwinds. For all the, for all the bashing I just did on job growth, I think that is ratfully a headwind going into 26 is that the labor market does need to gain some steam. If we're gonna see absorption, at least if we're gonna see absorption accelerate, I think absorption can kind of hover around where it's at with labor market fundamentals also holding about where they are. - So, let me give you a hot take on that, Carl. So, what do you think about this? I think absorption is gonna come down in 26, even though it was 25. I think people will panic over that, but as long as absorption comes down at a slower rate than supply, then that's fine. If a vacancy's improving, you're gonna see upward pressure on rents. And so, I look at absorption can be less than 26 and it wasn't 25, meaningfully less. If it looks, even if it comes down to pre-COVID averages, that would still be a lot less than we had in 24 and 25, but that's not necessarily a bad thing in a lower supplied year, and that could still be enough to drive some momentum in the market, right? - Yeah, and I think the other thing too, is it's important to note that absorption has an inherently fixed number. And there's also kind of the soft fixed number that when apartments are effectively full, which our data shows that we're approaching that 95% number at the end of the year, which tells you that the summer peak season probably did surpassed 95% for stabilized. For stabilized, you're probably gonna have some inherent, you're gonna have some, at some point, absorption will inherently have to slow down, but like you said, that's not necessarily a bad thing. And then I think we're actually gonna see a period sooner rather than later, where absorption's going down, but rent growth is accelerating, and a lot of people aren't gonna necessarily know how to reconcile that story, but there's, as you mentioned, a lot more behind it than just the simple absorption relative to growth number. - Yeah, I guess specifically, just not to get too in the weeds here, we're talking about absorption capacity is limited by what's available. So if you have, if the number of vacancies in the market, and making out number, it drops from 10,000 to 5,000, there's less available to absorb. And so you're gonna have absorption numbers gonna come down as a function of less supply. And by the way, Carl, I think also you mentioned, just kind of talk about the most recent numbers in Q4. Q4, 2024, we had a lot of absorption, but that was also, I think, the peak quarter for supply. And so you had a lot of the Lisa absorption that showed up in Q4, 24. Q4, 25, I think we're seeing negative absorption, but that's actually, that's more typical, normal seasonality, right? - Yeah, and when we say negative, it's kind of barely negative, so it kind of, more so reflects what you would think of this time of year if just people aren't really shopping, people aren't actually actively out in the market. It's the holidays, it's just not the peak leasing season. So I think that's a good point too, is that when you look at that fourth quarter, quarterly supply figure, that was effectively the peak. So there are 24, 24. And then today, that number has come down. I'd have to look at the number again, 25% versus where it was last year. So understandably, the absorption number has gone down. - Yeah. All right, so it's not to be accused too much of rose color glasses here. I wanna just briefly make the point here that even going in any Q4, it's like Q4 doesn't make or break a calendar year, right? And so I think even going to this quarter, my point, I'm sure you're probably saying something similar is that, you know, that Q4 doesn't really give you a good sense of the pulse of the market. I think, Carl, what's gonna be really important, and I'm just, I think really staying the obvious here, is what we see in the early spring leasing months, like this is the period that you mentioned last year, it was a year that was a little bit abnormal in this pre-start west strong and tapered off. But this is usually when, you know, the spring is what sets the tone for the rest of the year. And so if we have a soft spring, especially, you know, March April timeframe, maybe even earlier, that would, I think, more materially concern me about the rest of the year. - Agreed. And I think January will be too early to tell. I think February, you start to see a little bit about my March, I think that's when you really start to start to get the real details. And because of March, I guess because of the timing, all that, you know, the one quarter numbers, maybe our quadastelling is a lot of people want them to be, but I think that by March and April, that's gonna be the real tell-tell sign. And again, like you said, maybe February, you start to see some early signals. - So you think we're getting back to more kind of normal seasonality as supply drops off? We'll see that more. - It's a good question. I think that's something that, you know, I don't, I can't at least speak, and I don't know that I've had a really good strong answer for the question of is seasonality permanently disrupted? I don't know if you have some thoughts you'd like to share. I think that there's a little bit of both where seasonality is permanently disrupted, relative to where it was say in 2018, 2019, but seasonality's more on track today than it was in 2020, 2021 and '22. So I think it's like we're getting back to a normalcy, but the new normal, is it gonna be where it was pre-pandemic either? - Yeah, I think the same, the retention rates, right? Like they're, they have to normalize at some point, but the new normal is gonna be higher than it was. - Yeah, the new normal is maybe 53% or as 2018, it was, you know, normal was 50%. - Okay, yeah. - All right, so that's an absorption. Let's talk about rents. What's your current rent outlook for 26 nationally? - So I think 26 is gonna be modest rent growth, but I think we'll see some improvement. I think some of that too is just gonna be by simple nature of some of the markets that are the most deeply negative today are gonna be less negative in 26, and that will pull up the overall average. You know, I think you're gonna see, well, maybe it's, maybe it's more useful exercise to break it out regionally, 'cause I think Sheryl kinda tell you where, excuse me, where some, some rate growth stories will unfold midwest. I think it's just more of the same, call it two to three percent rent growth than most of the markets across the Midwest. The Northeast, very similar, two to three percent rent growth in most of those markets, maybe even a little bit stronger in some of those markets that are kinda getting that boosted, I don't know if it's all returned to office driven, but some of the Northeast markets have like a true CBD, New York City, Philadelphia. I think Boston will see some improvement, but I think it'll continue to lag a little bit DC. We'll talk about that later, 'cause I think that's kind of on its own, now it's on its own little cyclical journey. The West region, I think you'll see a little bit of a split where you have the Phoenixes, the Dinders of the World, still negative rent growth in 26, but perhaps, at least not as negative, versus the West Coast, you know, I think you kind of have the Northern West Coast markets, I think that's where you'll see continued rent growth. SoCal, maybe a little bit of a different story, kind of watered down the Los Angeles in particular, but the Sun Belt I think is where the story's gonna ultimately unfold, because the past couple of years you've had the entirety of the Sun Belt on its maybe Virginia Beach, which we could debate, whether that's even truly Sun Belt, it's still sunny there. It's still sunny, but I think you're gonna see some of those markets that had been kind of lagging, partially because supply pressure was true in most of these markets too, you know, outside of Memphis and Virginia Beach, pretty much every South region market was going through a pretty significant supply wave. So I think my nature is some of those markets starting to show some improvement. You'll see the overall national number. I think I gave an estimate the other day on a call with you where we said about a, what was it, 1.8% to 2% rent growth, I think is a national number that we feel pretty good with. Yeah. All right, so, and I think, yeah, that makes sense. And as you alluded to, I think on a national level, I think the consensus view, which I generally subscribe to, is it's still these lower supplied coastal markets, especially Northeast, certain West Coast markets, like the Bay Area Midwest, will likely see, you know, see the, dominate the rent growth leaderboard for the most part. But I think we could see some surprises and from the Sun Belt re-emerge. I'm not gonna say they take over. I think they still are lagges as a group. But I think we're gonna see some that, some surprises that jump back up on the leaderboard as concessions burn off in a certain markets cover faster than others. And so, I understand it's probably not your base case forecast, Carl, but in your upside scenario, which of these higher supplied markets do you think have potential to maybe have some surprise and maybe show up above the national average this year? Yeah, the, the concession burn off points and interesting one too, 'cause that's something that's hard to out-wrap model in a forecast. But in real world application, if, and I'm talking very round numbers here, if supply on a market goes down 20%, and your occupancy has improved a little bit while that supply gone, went down 20%. Well, in theory, you now have 20% of leases that are gonna be burning off a concession into an environment where there's less supply, lower vacancy. Therefore, there's gonna have to be some degree of that concession burn off, actually showing up in the market numbers. Yeah, I mean, just so everybody knows, we measure rent crows, it does my wish day provider. Well, all the major day providers, they're measuring the change in effective rents, which is with the concession. So even if you're asking rent stays the same, but you remove the concession, that is rent growth. Yeah, and I'll kind of detour real quick from your question on the individual markets that might surprise, but that's another good point when we talk about rent growth because renewal rents continue to grow past couple of years. And they're not growing quite the degree that they were a couple of years ago, but still you're seeing 3%, 4% trade out on renewal leases. So if half of your rent role is staying put in some markets more like 60-ish percent, then you've actually got some growth happening on rent roles that isn't just what the market is bearing out on those new leases. So that's just kind of another little-- All right, sorry, Bomo Rabo. I gotta mention then, though, if we do not see a soft, strong spring lacing season, and there's no reemergence of reemergence of rent growth and concession burn off, it's going to really hard to push renewals anymore. Because at that point, you run into these, you know, gain to lease and really rent role scenarios, where if you're pushing a renewal rents any further, even if they can afford it, your renters are going to look on your website and see it's cheaper just to move out and move back, yeah. So I think, again, I don't want to let that's the base scenario, but I do think that's a downside risk. Yeah, totally. But that's exactly what we've seen happen in Denver, in Austin, in Phoenix, some of these markets that have had prolonged periods of new lease rent contraction. But anyway, I digress, back to the question on Sunbelt Appreformers, which ones have you had to pick some that might surprise us? So I think Tampa is one that comes up a couple of times. And, you know, I went into last year saying that Tampa could be the first Sunbelt market to kind of surprise on the upside. And again, the first three, four months of the year, Tampa was actually rocking and rolling. It was performing actually not that far out of line with its pre-pandemic numbers, but the summer really saw Tampa fundamentals come undone. So I think the fact that you have supply, cooling there, pretty quickly, and you've kind of got this period of re-equalibration for lack of a better term of migration trends and job growth. I think that the Tampa market could surprise to the upside. Now again, when we say surprise to the upside, we're not saying it's the number took five market in the country, it's just that I think that could be one that sneaks ahead of the national average. Another one that gets thrown out there too, may have a hard time getting to the national average because it is just a little bit lower currently. But Raleigh Durham, I think you look at the tonning of supply there, you look at the top of job growth that's still happening there. And again, you still have those demographic tailwinds of people moving to Raleigh that weren't necessarily just moving there because of either the pandemic or because it was a national work from home destination. I think those smaller zoom town vacation style markets are the ones where that story bears out more in terms of just maybe having a harder time recapturing some of that bounce back. So I would say Tampa, Raleigh, and then you covered this recently, but Atlanta is one that is already starting to show a little bit of rebound in momentum. And Atlanta's been a little bit tricky too because it hasn't necessarily been any of the headline numbers that have made the market seemingly weak on the demand side of the equation. It's been things like hard to detect fraud. It's been, there has been some slowing migration to Atlanta as well. But Atlanta's been one of those. It's been particularly in the urban county area, full of county area. And full of county area. And that's a good point too when we start looking at some of the urban core versus the suburban story line. So I think those would be my three Atlanta, Tampa, and Raleigh could be surprise performers. Yeah, it does seem even looking at some of the Q4 data that some of these southeast markets you mentioned if you have them, or maybe holding up or turning the look, I don't want to get, I mean, we're kind of getting in the green choose conversation. We're not talking about full recover, we're talking about like early signs of it. You mentioned if you have them. But I think also, we've still got some data for Jacksonville or Lando, you know, Charlotte type of sleep and hit, but still I think comparatively hell is up a lot better than Austin and others. It seems like there's some, that whole region may surprise us. And I don't say I hate time to ratchet up the forecast, but it seems like those demand drivers in the southeast remain pretty strong. Sure, yeah, no, totally agree. I'm actually gonna steal something from the you set earlier that'll make me sound smart. So I'll take credit for it. And that was really you. But we were looking at Jacksonville numbers. And I was a little surprised. I was like, man, that Jacksonville number, the occupancy is a little bit low for some of that rent growth that maybe is starting to finally start to brew. And again, not a lot of rent growth, but a little bit of movement. And you brought up the good point that this is a momentum business. And the fact that momentum is building, I think the fact that there is some momentum building in some of those markets is also gonna be a factor to consider. Yeah, I know I appreciate that, Carl. But I think, I do think you're gonna see on some of these markets where I really do think we'll see a few of these markets really surprise us and think, hey, well, there's still a recovery to work through. But I think that there's been, after three years of no rent growth and these, you know, good businesses that need to reach pro forma and need to see something. Once they get momentum, I think they're gonna be pretty quick to start trying to ratchet it up again. And then obviously if the market doesn't accept it, they'll hold back. But if the momentum is there, I don't think there'll be a lot of hesitancy to try to push. But we'll see how that plays out. So now obviously we're talking about 26, but Carl, for most of the, most people in the industry, they're making decisions thinking about longer term, next five to 10 years. And so I'm sure you'd ask us all the time, but for investors and developers, thinking the next five plus years would markets do you like? Yeah, this is always a fun question to go down the rabbit hole line. And I will say too, before I get into some markets that I really like, one thing I think it's important to note is I genuinely do think you could make money and make sound investment decisions in nearly every market in the country. You know, I think even with the right investment scope, the right strategy, the right set of expectations, a young's town, Ohio, couldn't make sense. You know, I'm not saying that that is the market that I would go look at, but you know, I do think that they're the, again, fundamentally, the business, the rental housing business that is is in good enough shape that you could, in theory, find an opportunity everywhere. Yeah, now going forward in the next five to 10 years, I think that there's some Midwest markets that maybe are going to start not necessarily popping up on radars 'cause I think they already are, but maybe staying on radars. And I think that with that, you're gonna see kind of this interesting feedback loop with the Midwest where one of the knocks on it, the last cycle, and rightfully so, was that there was a lack of liquidity. Well, now that liquidity is actually starting to come into nomenclature in your Indianapolises of the world, your Columbuses of the world, that maybe makes that market a little bit more attractive. Absolutely. Outside of just even the fundamentals, 'cause not by Youngstown, but-- Yeah, Youngstown, and I use that as kind of a tongue in cheek example, but I love your Youngstown, I don't know about liquidity there. Yeah, not a highly liquid market, but, you know, I think you start to see some of those markets, again, Indianapolis Columbus, where fundamentally, they've been pretty good for a long time. Yeah. Now that the liquidity or the lack of, I guess, the illiquidity, good discussion, starts to fade away, I think those markets offer some opportunity, you know, I still think that the Sun Belt has a number of good opportunities. You know, I think you still maybe are looking at if you acquire today, maybe your first year, is it necessarily what you would want to see on an initial kind of acquisition strategy, but that isn't to say that you can't get that later on, especially with how fast supply is burning off, in a number of the Sun Belt markets. So if I had to pick some there, and that's where I'm not just trying to sound like a homer here, but Dallas kind of is moved into that, you know, really kind of that name brand market. Yeah, it's tier one market, it's a tier one market, and I think even more so than in Atlanta or a Houston, which are often kind of compared to similarly sized markets. A couple other markets that, excuse me, that I also really like too. You know, I think that there's some opportunity on both of the coasts for that matter. You know, I think when you start to look at some of the demographic drivers and say like a Seattle, for example, and maybe it makes sense there, but the challenge, of course, is gonna be what happens on the legislative side of the equation. And it's easy for me to say that it looks good on paper, but I think from an investor perspective, there are a number of, you know, hard to account for kind of external factors that maybe diminish the outlook there. Well, especially I think we can separate the city of Seattle, where there's some, you know, let's just say some real reason to be uncertain about wanting to replace capital to build anything or buy anything. But the Eastern suburbs, where they have a little more, I think, political stability to say it gently, is probably a different story. Yeah, that brings up a good point too. I think that if there's another kind of investment theme that comes up over the next, call it decade, is that the macro story isn't gonna matter as much as the macro story. I think that when you start getting individual, you know, you've pointed it out with both Atlanta and Seattle, that when we talk about these markets, we're talking about the market on aggregate, but really that Fulton County story maybe isn't the same as what we're talking about in Cobb County, you know, so I think that it's really gonna be more of a localized kind of macro ties, if you will, investment story. Yeah, we've seen you seeing that even in Dallas, like you look at like potential the stress numbers in Dallas are pretty big, but a lot of that was the kind of short-term buyers, you know, the, you know, kind of the short-term flip strategies, value-ad strategies in the wrong submarkets, right? Total, so it is a sub-marja game. So you mentioned, you know, Seattle, I mean, the same thing and, you know, there's some great attractive politically stable suburbs in the Bay Area DC. We talk about DC at the time. Are you talking about the district? Are you talking about Montgomery County? Are you talking about Northern Virginia? There's a three different stories. Yeah, I know, everybody is still in favor. Montgomery County, not so much, the district not so much. You know, the same thing is in the suburbs of New York and whatnot as well, so yeah, I think probably the same page there. Yeah. And I think also too, I don't want to knock the downtowns too. I do think you're gonna have, you know, one thing is interesting, you look at the next, I want to talk more about supply in a second here, but Carl, the drop-off and start season the most impactful with some of these downtowns, urban areas, where at the higher cost to construction, you know, I think you could still make a bull case for in politically stable cities with less regulatory headwinds. You couldn't make a real strong case for urban investment in some of those spots. Yeah, absolutely. I think the urban investment thesis obviously was spooked in 2020 because we just didn't know what was gonna happen with downtowns. Well, now we see that, hey, downtowns still matter. Like, downtowns are still attractive places to be, by and large. And I think the biggest thing there going back to the demographic tailwinds is, where do 20-somethings who have just got out of college or 20-somethings that, you know, want to live close to their place of employment? Where do they usually want to live? Well, they want to live downtown. So they're still like these trends that favor that downtown story. And I think that if anything, you see some kind of new up and coming downtowns, if you will, like newer, that's able to tie in to Manhattan, where even if you're remote, I'm sorry, not remote, even if you're hybrid, where you're remote two or three times a week, that makes it viable to live in Jersey City and commute to the west side of Manhattan, whereas five years ago, that was maybe not going to be necessarily the math just wasn't going to work as well because you were going to be commuting. So, yeah, certainly Jersey City more than Newark itself, but yeah, that's been a good story. Now, I should note that it's also nice to downtown, sometimes surrounding areas. Like, there's an article in "Push Up You'll Saw" about downtown Dallas. It's why all the growth in Dallas, downtown is, you know, probably still stuck in the 1980s. But, you know, you have a lot, all these cities, they all have urban neighborhoods outside surrounding downtown that I think could be well positioned. - Totally. - All right, so let's curl, let's wrap this up, asking about supply. Obviously, it's been the big theme of this cycle. The question we're getting a lot is, how long does it take before supply starts, start to ramp up again? So, let me start with that. Like, when do you think we start to see a real pickup and starts? - Yeah, that's hard 'cause we talk about when our starts starting again, but-- - Yeah, yeah, a lot of start, start. I think the, and this is something too that a lot of people, this is a fun debate topic, if you will, like how much the national starts number matters. I think the national number won't actually see a lot of movement in the next 12, 18 months. I think by the time you get to, I guess that would be the start of 20, 28. Maybe you start to see, you maybe you begin to see starts, pick back up a little bit, but there are actually some individual markets where starts are starting to, starts are beginning to pick back up again. And I look at like a Miami, for example, where starts today, I don't have the exact number, but there were more starts in the past 12 months than there were in the preceding 12 months. So you're starting to see some individual markets show some movement there. I think the national numbers maybe would get watered down because in Oakland, maybe isn't gonna see any starts, the way that it was in the early 2020s. And maybe that makes the Oakland and Miami number a net wash or a net zero. So, but I think by 20, 28, we could start to see a little bit of more of that movement happening again. - Yeah, I think that's probably a good number because I think a lot of the industry, they have to see some recovery in some stability and rents for they can start to build again. And that does get you to 27 or 28 before that can really happen. And then Carl, lastly, I think that even as they ramp back up, it's really, really hard slash impossible to see a scenario where they get anywhere near the numbers we saw for starts in 22 and 23. - Yep, totally. I think the other thing to mention real quick too, and I know we have a timeline here, but the other thing to mention real quick on starts is that the distress that we've seen in the market hasn't been in the new builds. In fact, new builds have actually been performing pretty well relative to say, you know, the class C sector, which I think that's where a lot of the distress remains. So, it's not that there isn't an appetite for building, it's just kind of a wait and see, and it's not like it's, you know, '07, '08 again, where there was ubiquitous distress at all price points. The fundamentals for that class A property type remain pretty solid. So, I think we'll see starts, we'll inevitably see starts back up at some point, but I think like you said, we'll need at least a year of kind of improvement recovery, and then it takes a little bit longer to get everything worked through the legal pipeline and the permitting pipeline, but. - Yeah, certainly the management gray. I think the challenge for these newer projects, and if there is distress where it might be concentrated is the fact that, you know, the lease up rents today are what the same as they were in 2022. And so, they're just not getting the rents that they need to justify the cost of construction. So, that's gotta get some recovery before we see a pickup and starts again. - It's very good points. - Well, Carl, this has been a lot of fun. Thanks for making the trip up here. - Of course. - And hope 2026 is a great year for you. - Thanks. (upbeat music) And that's wrap it up. So, number 68 of the rent roll. Big thank you to Carl for being our guest today, and also thank you to our sponsors, to JPI, Madera, Funnel, Mason, Joseph, landing, and Authentic. And thank you to all of you, for spending part of your week with us. For those of you who'd be in Vegas for an MHC, hope to see you there. Everybody else, we'll see you next week. (upbeat music) [BLANK_AUDIO]