Studio Goldmines and Three-Bedroom Busts: Following the Money in Rentals | Real Estate Market Update w/ Martin Perdomo

The rental market has reached a pivotal turning point that smart investors can't afford to ignore. After more than two years of stagnant or declining rents, we're witnessing the biggest year-over-year jump in apartment rents in two and a half years. At $1,790, the median asking rent has climbed 1.7% since last July – and this is just the beginning of what could be a significant upward trajectory.

What's behind this shift? A perfect storm of economic factors. Homeownership remains financially out of reach for many Americans, pushing more people into rentals. Simultaneously, multifamily construction has hit the brakes – permits are down 23% nationally since the pandemic building boom. This supply-demand imbalance is handing power back to landlords after years of tenant-favorable conditions.

The geographic patterns tell an equally compelling story. San Jose leads with an astounding 8.8% rent increase while its building permits plummeted 74%. Chicago, Washington DC, Pittsburgh, and Philadelphia all saw rent jumps exceeding 7.5%. Meanwhile, markets like Jacksonville and Austin, where construction continues aggressively, are experiencing rent decreases. Perhaps most revealing is the unit size data: studios and one-bedrooms are up 3.4%, while three-plus bedroom units fell 1.5% – clear evidence of changing demographic preferences as younger generations delay family formation.

For multifamily investors, these signals demand action. With Gen Z (larger than the Boomer generation) entering prime renting age and construction slowing, we're heading toward an even more severe housing shortage in the next 2-3 years. Don't let higher interest rates keep you on the sidelines – you can refinance later, but the opportunity to secure properties before this supply crunch fully materializes won't wait. Follow me on Instagram and Facebook @EliteStrategist for the unfiltered strategies we're implementing behind the scenes to capitalize on these market shifts. Be strategic, be early, be elite.

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Transcript

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Market Update Introduction

Speaker 1 0:44

Welcome back to this week's Real Estate Market Update , where we break down what's really happening with prices , buyers and strategy . Later in the episode , I'll tell you how to stay plugged into the moves we're making behind the scenes so you can move fast , fund smart and scale in today's market . According to a brand new data from Redfin , us apartment rents just posted their biggest year-over-year jump in two and a half years . Rents are rising , supplies is tightening and if you own , or plan to own , mid-to-large multifamily units , this episode is for you . Let's get into it . The median asking rent for US apartment is $1,790 in July , up 1.7% year over year . That's a $30 jump and it's the largest increase since January of 2023 . This marks the second consecutive month in positive growth after more than two years of flat or falling rents , and while we're still below the peak rent level we saw in July of 2022 , momentum is clearly shifting and is favoring landlords again .

Rising Rents and Supply Shortage

Speaker 1 2:11

Finally , so what's driving this ? It's all about supply and demand . On one side , demand is rising . The cost of home ownership is still high and more people are choosing or being forced to rent . On the other side , multifamily construction has also slowed way down . Permits to build new apartment units are down 23% nationally since the pandemic building boom . That means less new supply is coming to market and landlords are regaining the leverage . Redfin's senior economist said it best Rents are sluggish in the past two years because of oversupply created during the pandemic . Now that construction is slowing , the power is shifting back to the landlord . That's a key point and for those of us holding multifamily assets or looking to get into the game , this is the signal we've been watching for . Now . Very , very , very important here to point out . We see multifamily permits down , which means that in two , three years we're going to have a what again ? A housing shortage supply that's even bigger than the one we have now . Gen Z generation is bigger than the boomers generation . Gen Z needs a place to live and now , with the slowdown of new building and new apartments , that's going to create a problem which is going to create scarcity in the market , which is , with demand coming to market , that's going to increase rents even more .

Speaker 1 3:56

So if you're an investor and you're on the sideline because interest rates are high ,

City-by-City Rent Analysis

Speaker 1 4:03

stop it with that . Get out there and buy deals , make sure they cash flow , even with higher interest rates . You can refinance later , okay , but if you sideline . For those of you that have been sidelining , you're going to watch us , the pros , eat your lunch . So if you want to eat with me , make sure you go out there and buy .

Speaker 1 4:25

San Jose , california bye , san jose . California just posted the largest rent increase in the nation in the nation , up 8.8 percent year over year , with a median asking rents hitting 3569 dollars . Holy crap , that's a mortgage . That's insane . Chicago came in close behind at 8.6% , followed by Washington DC at 8.5% and Pittsburgh and Philly Pittsburgh at 7.7% and Philly at 7.5% .

Speaker 1 4:57

And it's no coincidence that these cities also saw a massive drop in new construction permits . Look at the direct correlation guys . Direct correlation New construction permits down , prices up . In San Jose , for example , building permits have fallen 74% since the pandemic . That kind of supply freeze drives prices fast when demand stays strong . On the flip side , rents are still falling in places where supply is coming online faster .

Speaker 1 5:29

Jacksonville , florida unfortunately , my state saw the biggest decline down 33.5% year-over-year . Austin declined . My friends , I have some friends in Austin . My girl Tamar . I know you're a big investor in there . Shout out to you , my girl Tamar . Louisville , cincinnati , phoenix and Cleveland also saw slight drops . These metros have continued to permit aggressively . In fact , austin permitted more than 63 multifamily units per 10 000 people over the past year , second highest in the nation .

Speaker 1 6:09

It's just simple math , guys . Simple math a lot of supply right over supply in the market drops prices . Less supply in the market . Higher demand increases prices . It's just simple math , guys . This is the old supply and demand thing . It's the basic , fundamental stuff . So , again , this is a supply story . In overbuilt markets , rents are soft . In undersupplied markets , they're heating up Investors who know the difference . That's where the edge is Now .

Unit Size Impact on Rental Growth

Speaker 1 6:48

Here's something especially relevant if you're managing or acquiring apartment complexes . Studio and one-bedroom rents are up 3.4% year-over-year , the strongest growth since 2022 . Two-bedroom rents climbed 1.7% , but three-plus-bedroom units actually fell 1.5% . This data just makes sense because if you study migration patterns and if you study which I do , if you're an investor , you should be watching this stuff and you study population growth remember America's population is actually slowing down , so people are waiting longer to have family . So if Gen Z and millennials are waiting longer to have family and to have children , that means that these bigger spaces , like the three and four bedrooms , are going to have less demand . This tells us renters' demand is highest for smaller apartments , more affordable units If your portfolio skews towards compact , high-density layouts . If you're considering value-add conversions , that's where the yield is growing . To my partner , javi , if you're listening or you're watching , right on the money baby , we're taking those units and we're turning them into a bunch of one bedrooms and studios . So the data points that that's where the puck is going .

Speaker 1 8:16

So what do you do with all of this ? If you're in planning or getting into multifamily , especially midsize apartments or larger , here's what matters Review your unit mix and adjust your rent strategy accordingly . In high-demand metros with shrinking supply , consider pushing rents more aggressively in Q3 and in Q4 . In oversupplied

Strategic Recommendations and Closing

Speaker 1 8:37

markets like Austin or Jacksonville , focus on retention and renewals , sweeten the lease terms , keep occupancy stable and ride out the flood . That is exactly what we're doing up down south with our down south asset . It's exact strategy . If you're acquiring , lean into metros where permits are down and demand is stable . That's where long-term equity and cash flow converge . And remember concessions are like free parking and reduced rents were common all over the past two years , but they're drying up rápido fast . If you're negotiating leases now , you may have more room to shift terms in your favor If you want to keep getting the unfiltered truth on this market the numbers , the funding strategies and the exact place we are running behind the scenes .

Speaker 1 9:37

Follow me on Instagram and Facebook . Just search at Elite Strategist and if this episode helped you get clear on your next move , share it with another investor who needs to hear this information . That's your Wealthy AF market pulse . Be strategic , be early , be elite . Catch you next week . Peace out .