Is the Sun Belt’s multifamily bubble poised to burst?

TRD’s “Deconstruct” podcast looks at investor sentiment as rent growth wanes

A photo illustration of RealPage Chief Economist Jay Parsons (LinkedIn/Jay Parsons)

Suzannah Cavanaugh

Feb 27, 2023, 7:30 AM

As rents have cooled across the Sun Belt, a region that drew outsized investment activity throughout the pandemic, some industry insiders have dismissed the market as oversaturated. Others have begun to mine for distress.

But Jay Parsons, chief economist at RealPage, says the forewarnings around a bust cycle following the area’s Covid boom are likely overblown.

“I think the reason it’s getting so much focus is because the capital has really shifted so much toward the Sun Belt,” Parsons said.

“But every year it’s sort of the same thing,” he added. Analysts on Wall Street underscore the abundance of supply, ease of homebuying and lower asking prices, and conclude that there is too much risk.

“But every year it also plays out that analysts are overstating the impact of supply, understating the impact of demand,” he said.

As rising rates have roiled some multifamily investors, The Real Deal’s “Deconstruct” unpacks which Sun Belt buyers have reason to worry, and why the region as a whole is more stable than some may give it credit for.