Don’t mess with the bull

Much like the great split incentive that sits at the heart of our multifamily businesses, we are a country conflicted. Sitting squarely between what we hear, what we know, and what we can actually do about it; truth seems mostly a closely held belief.


That’s where numbers become important. Numbers drive our operations, set our projections and bear our cash flow, and right now the numbers are some of the best most of us have seen, and a flagship for our anemic economy.

The apartment business is a hub with many spokes. We are the landlords who rise from the earth’s dirt with apartments where there once were none or worse, blight—taking risk, riding downturns, and yes, sometimes catching a wind in our sails. Our businesses are complex and find us involved in everything from utility dispensary to the frontline of immigration to gatekeepers of fair housing. Success is found in how we navigate this multi-faceted business, all while driving cash flow, asset value, and still making it to Las Vegas to tell the tale at the National Apartment Association’s Educational Conference.

We are continually held accountable by regulations, and residents, and economic cycles. We must navigate cap rates and rate of returns and asset values, and always, but always have a plan for whatever the economy or governments bring.

We must be super heroes. We house a third of the nation while single-handedly curing the world’s darkest ills—poverty, discrimination, we’re even the next bastion of conservation though it’s not us directly using the utilities. How do we do it?

If you’re around the industry long enough, you’ll soon realize it’s full of some of the sharpest knives in the drawer. Multifamily, indeed, the nation’s landlords, are some of the brightest innovators, problem-solving business owners and operators in the country.

The rent is not too high. Indeed. The rent is what the market will bear.

What is wrong is not the rent, but, by statistical measure, stagnant wages, rising debt and low growth. Underemployment and unemployment is the highest I have witnessed in my lifetime. Unpacking the statement that the rent is too high quickly exposes a profound misunderstanding of how a well-functioning market system operates.

Rent is about metrics. And free markets. And economic indicators. Times are very good in the multifamily world and it appears that we have a few more years on this cycle.

By all accounts, wages have risen enough to support rents, and jobs are beginning to scratch up enough new household formations to rapidly absorb new inventory.

It won’t last forever. For now and sometime into the future, apartments are one good thing about the economy.