EP#103 Joanna Zabriskie | The Case for Multifamily & SFR

Jay Parsons (0:02)

Welcome, welcome. It's episode number 103 of The Rent Roll, your podcast on all things, rental housing, apartments, single-family rentals, and build to rent. Coming to you this week from Milwaukee. And I love coming to the Midwest. I love a good Midwest city. Many of you know this about me. I love the history, the architecture, the culture, the walkability, and of course, the local sports fandom that's a little bit different fervor than what you get in other parts of the country, and a little bit slower pace as well. So it's a nice mix. And Milwaukee is one of those places, great downtown. And plus, of course, the Midwest, you get those steady, eddy apartment performances, and Milwaukee is no exception. But hey, this week is not about Milwaukee. We got a bigger topic for today. The case for rental housing, for apartments and for SFR and BTR, but really just broadly rental housing. So we're going to make a little bit different today. Always trying to mix things up here on The Rent Roll.

I'm going to present to you eight slides that I think make the case for rental housing high level. And then later in the program, we'll go deeper in the interview segment of the podcast. And we're going to make a little bit different in the interviews today. Joanna Zabriskie, who's actually a past guest of The Rent Roll, and she's the CEO of BH, she's turning the tables on me.

She's interviewing me this time. And she did that at the Pretium Investor Conference. And the Pretium team gave us permission to use that recording in today's podcast. So I'd much rather be the one asking Joanna the questions, because she's someone who has a great pulse in the market. She knows what's going on. She's someone I highly respect. But she insisted on this format. So I thought, what the heck? Let's mix it up just this one time and let Joanna ask the questions.

And but it centers around this topic, about the case for rental housing.

Joanna Zabriskie (1:56)

All right.

Jay Parsons (1:56)

And before we move on again to all that, I do want to give you one more big announcement, a big housekeeping item I want to share. We are starting a second podcast. And I know you're probably thinking, we don't have time for that. Well, that's what this is all about. It's a shorter form podcast, 10 minutes. It's a 10-minute running clock with a guest on the hot seat each time with rapid fire questions, trying to get through as many questions as we can in 10 minutes. And part of the reason I'm doing this is I want to get to include more people, but also I want to talk a little more about operations and tech topics. We don't really do a whole lot of that here on The Rent Roll. So anyway, that's going to launch next week. Be on the lookout for that. It's called the guest card. Obviously, a term that everybody in rental housing operations is well familiar with. We'll do a little play on words there. The guest card from The Rent Roll, so be on lookout for that. All right, let's jump in.

First and foremost, want to give a big shout out to JPI. Leading apartment developers, state of purpose of transform building, enhance communities, and improve lives. Check them out at jpi.com. As I've told you before, JPI is at the cutting edge of some really exciting innovations in apartment development and construction.

As always, we kick it off with a little section we call Here's a Chart.

For this week, I've got eight slides I'm going to share with you. I'm going to go through this pretty quickly, Making the Case for Rental Housing. Again, this is not designed to be a thorough academic study, just eight slides that I think help make the case for rental housing. This segment is going to be sponsored by Northspire. If you've developed anything, you know this one. The forecast and the budget live in one spreadsheet, the draw package lives in another, and somebody on your team spends the last week every month stitching them all together into a report that's already stale by the time it goes out. Northspire was built by a real estate developer to end that. One platform for budgets, forecasting, draws, scheduling, and vendors across every project you've got. Northspire has facilitated more than $500 billion of projects. northspire.com.

All right, here we go, eight slides. I'm going to go through this quickly. Number one, the American renting stage of life is elongating. Okay, I think this is one of the most key topics to understand if you're investing in rental housing. Okay, so look at this chart. Look at the share of 30 year olds living on their own, getting married, living with a kid, owning a house. They've been going down for 40 plus years. And if you can't see this slide, I'll talk you through it. Okay, what it's showing you is all of these different milestones. At age 30, the share of Americans reaching that milestone has gone down. And those things, of course, are oftentimes tied with home buying. And by the way, this trend has not just started since mortgage rates went up. It's been going on for 40 plus years through multiple home buying cycles. And obviously a lot of factors go into this trend of the elongating renting stage of life. But I do think the higher quality of today's rental housing is at least a part of that story. It's just a better, stickier living experience for renters today versus when many of us were renting, versus decades past. And that's just one factor of many indicating there's just a structural lifestyle shift, not just a cyclical affordability issue. And I think that's a big part of what's driving this elongating renting stage of life. That's a big tailwind, even as population growth slows. Also, we see this support in the second chart you see on the same slide. It's a Federal Reserve survey showing the renters are reporting that they are less and less likely to move out. Now this survey shows the share of renters expecting to move within three years. And that share has fallen by 20 percentage points over the last 12 years. And most of that just over the last six or seven. And in fairness, obviously some of this is due to older renters seeing less chance of buying a house. The premium to buy versus rent is, I think everybody knows this one by now. It's near record highs and that's obviously a real factor. But I don't want to just, again, let's not make it all about that. I think it's a supporting factor. It's not the only factor. Remember, we also see surveys of Gen Z renters saying that many of them actually prefer renting and think it's a better financial decision, at least for this stage of life. Either way, Americans are renting longer. That's a real tailwind. And I think you can make a pretty good case that that's a trend that's likely to continue.