Rent and Operating Trends Week of October 23rd

Inflationary pressures remain the most important topic in the U.S. economy and this week we will have a glimpse into how higher prices are impacting consumer and corporate spending, as earnings will be released for the largest tech companies. Microsoft, Apple, Amazon and Google will all release their Q3 earnings this week, and it will be interesting to note if companies like Apple and Amazon see any significant change in consumer behavior. Google, whose performance is heavily driven off advertising revenue, could be a proxy for how businesses are choosing to spend in the rising price environment. In addition to the tech earnings, Thursday will also bring the first estimate of Q3 GDP, and its results will likely raise the question once again of “are we in a recession”. After two consecutive quarters of negative GDP, my view is that we are already in a recession. We should not change the definition just because this economic contraction may be different from others. While there are many economists who disagree and claim we are not yet in a recession because of our strong employment market, another quarter of negative GDP would likely lead more of the leading economic minds to declare our current economy in recession.

Multifamily fundamentals continued forward with additional stability in leading indicators Traffic and Leasing, and additional declines in occupancy, leased percentage and rents. The usual fall seasonality remains in almost all markets and will likely continue through the holidays and into next year. Transaction activity is slowing but operating fundamentals should remain in decent shape despite the slowdown, as the nation remains in a housing shortage, and single-family home development has quickly stalled.