While big picture numbers can provide a general idea of what’s happening in the market, there’s more to the image than national figures suggest. It’s important to look at the difference between deliveries, permits and starts to evaluate future supply. The dynamics of supply and demand shift constantly, but it’s particularly important to understand that supply exists on a continuum of time. As everyone in the industry knows, permits don’t always indicate a project will go forward immediately and starts are no guarantee of a delivery date.

Perhaps more importantly, all real estate is local. Macro trends are national or even global. If you break down the numbers to markets and submarkets, they start to paint a very diverse set of pictures.

When you take the math for all 50 states, combine them together and come up with one number, it creates a very broad, fuzzy picture. When you start to drill down to different places, you get new numbers, and you get different stories. Some places are in equilibrium, some are vastly oversupplied, and some are undersupplied. There are nuances to every marketplace that go well beyond simple supply and demand figures.

For example, in one area, there might be a lot of apartments being delivered today, but there might be zero starts. So, two years from now, that market will be supply constrained.

When you look at marketplaces today, there are some where there’s a ton of supply being delivered. In those markets, there may be concessions and pricing pressure. We’re not seeing a massive amount of discount accounting to move product in any market right now, even though apartment deliveries are anticipated to be 51% above 2022 by the end of 2023.

Even in some of those submarkets where there’s a lot of supply, there’s also a tremendous amount of household formation and growth, so apartments are being absorbed in an orderly fashion and rental rates are staying in line. In submarkets where some concessions are being offered, this could be a short-lived phenomenon because the number of people moving to those jurisdictions and locations could be increasing. So, while yesterday there might be too much supply, tomorrow it might be completely gone. That’s why we take the long view when investing in different submarkets. While we do our research like everyone else – well, we like to think better than everyone else, of course – we don’t make short-term decisions based on deliveries. We look deeply at market predictions about migration patterns, job growth and other commercial and residential development to evaluate the long-term viability of any location, and then we work hard to create an enduring community where residents will thrive.