Jeff Adler, vice president of Yardi Matrix, said he is optimistic about the future of multifamily housing, even though there may be some bumps along the way.
“I don’t see job formation falling off the cliff. There’s some supply that needs to get absorbed—it will get absorbed. I see good things for the economy. There are disruptions ahead, but I’m pretty optimistic of where the economy is going,” he said. “But this year and a little bit of next year, if you’re in one of those top 20 high-supply markets, you’re going to have to dig deep and work hard and learn how to sell and not take orders.”
Adler sat down with Kimberly Byrum, managing principal of multifamily at Zonda Advisory, to kick off the Multifamily Executive Leadership Summit in Vail, Colorado, in early March. He touched on supply, starts, rent growth, housing policy, and more as he looked toward the future.
January was a decent month for rent growth, he noted, with national advertised rents increasing by 0.2% month over month and 0.8% year over year. Low-supply markets in the Northeast and Midwest fared well, while high-supply Sun Belt markets, such as Austin, Texas; Charlotte, North Carolina; and Phoenix faced weaker rent growth.
Adler noted that what’s going on in the top 20 new high-supply markets is not indicative of what’s going on nationally. “We do have separate dynamics,” he said.
“Nationally, rent growth has gone up because of the non-20 markets where the new supply is hitting. Remember, in the Midwest and the Northeast, rents are still growing 3% to 5%. The Midwest and Northeast, where we haven’t had a lot of new supply, is doing reasonably well,” he said. “Then you have 15 to 20 markets that are absorbing a lot of supply. In the long run, these economies are dynamic, and they will absorb this supply, and they will grow. They have been through this cycle five or six times before, and this is just a big cycle because the uptick was big and the response was big.”
Yardi Matrix predicts moderate year-over-year rent growth for 2025 and 2026 at 1.5% and 1.1%, respectively. Rent growth is then forecast to increase to 3.3% in 2027, 4% in 2028, 4.2% in 2029, and 4.3% in 2030.
“Looking ahead to 2025 and 2026, these aren’t bad numbers historically,” he noted. “2021 and 2022, you’ll never see those things again. That was a bizarre moment in time. It’s not going to happen again, and we’re returning to normalization.”
Yardi Matrix recently updated its first quarter supply forecast, increasing completions for 2025 and 2026 by 3.3% and 11.5%, respectively. In 2025, the under-construction pipeline will deliver the second highest amount of annual new supply since the Great Financial Crisis—524,933 units—only trailing last year’s record volume. In 2026, 414,134 units are slated to be delivered, followed by 341,020 units in 2027 and 405,870 units in 2028.
In addition, Adler broke down how the number of multifamily starts has slowed. In the first three quarters of 2024, Yardi Matrix identified approximately 298,000 units that started construction. This is approximately 40% below the levels recorded in the first three quarters of 2022 and 2023. Another 59,601 units started construction in the fourth quarter, bringing the total to nearly 358,000, which could increase in the months to come because of a lag in the data.
The forecast for starts this year will be similar to 2024 due to new higher-for-longer monetary policy regime.
“The big drop-off in supply will hit in 2027. That’s where you’re going to see bigger bounces in [rent growth] in some of the tech-hub markets where job formation narrows. Depending on how tight capital markets persist, 2028 is up for grabs,” he said.
Even with record-breaking supply for multifamily last year and into this year, recent housing data shows only 10 housing starts per 1,000 households. And on average, according to Yardi Matrix, researchers estimate that the nation is short 3.1 million homes, much higher than the 1.5 million homes under construction.
“We’re not really building that many homes compared with the past. There is a housing shortage writ large,” Adler said. “Once you get into 2027 and rents start going up again, if we haven’t gotten our arms around the public policy discussion about supply and free markets being a good thing, people are going to go nuts again about rent control—not that it hasn’t stopped in some of the bluer markets.”
Looking even further ahead on national level, Adler said the number of renter households is expected to increase for the next decade.
“What happens after 2040 is unless there’s a dramatic change in public policy toward sustained international immigration, we’re going to flatline on renter households. And then it will be a question of if you’re in the right markets to continue to obtain domestic demand,” he said.
