Top Takeaways: NRHC Industry Leaders 2023

Last week, PlanOmatic attended the National Rental Home Council Industry Leaders Conference in Music City. ???? With George Strait playing in the background, here is what we heard:

Stubborn Labor ???

Turns out Sam Chandan is a must-follow. Two important things from his interview: 1) The labor market is standing in the way of recession signals - we are close to a peak level of vacancies in the labor market, but unemployment is still very low. 2) Inflation is easing, but don’t expect an interest rate cut until next year at the earliest

Timing Problem ?

Plenty of capital still exists in the SFR asset class, but it must be patient. Colleen Keating and Margaret Whelan agreed that this is still a “well-positioned asset class.” David Singelyn explained: “We have a timing problem right now. The cost of capital and the cost of opportunity are out of balance. The 1980s were far worse than it is today. This is not a ‘shut down the sector’ time period. This is a ‘patience and discipline’ time period.”?

In a similar vein, Lauren Taylor called this, “The Year of the Operator - in the past the funds that won were simply fastest to acquire, but now it will turn into an Operator’s year.”

Supply Challenges ???

Panelists unanimously agreed that there is a housing shortage in the U.S. How do you solve this? Supply! Right? Well…

• Dallas Tanner said he is “bearish on new supply” because of high land prices
• Gary Beasley told us there were 66,000 new MLS listings this week vs. 100,000 last year at this same time
• Josh Pristaw talked about the “lock-in effect” for many homeowners that have a mortgage of around 3% (why would they sell out of that??)
• Donald Povieng pointed out that regional banks have severe constraints in lending in the wake of the SVB collapse, and they are often the ones providing financing for local builders

Sounds like some serious supply headwinds to me.

Affordability Opportunity ??

One way to address supply is affordable housing. Simon Frost said, “The single biggest opportunity for the industry is going to be workforce housing.” Lauren Taylor said, “Most available inventory is in very bad shape. We need professional management to get them up from sub-standard…there is a big opportunity to do workforce housing the right way.”?

Adolfo Villagomez and Dana Sprong were vocal about their initiatives to accept more Section 8 vouchers. They cited that data for Section 8 and market rent properties had very similar performance, and Dana said, “Any bias against them is unfounded.”

Technology ??

Believe it or not, ChatGPT was discussed. Here are some of the best tech-related quotes:

• “Emphasize ‘Events’ in your stack. Think about ‘Triggers’ as you set up your architecture so you can easily share data with any PropTech vendor.” - Manjula (Jules) Perera
• “Get out of the ‘marketplace mindset’ that forces customers into a daunting shopping experience.” - Chris Griego
• “For ChatGPT, we’re building an integration layer so we can adjust to whatever language comes next.” - Hench Lemaistre
• “Keep in mind these language models have no judgment.” - also Lemaistre
• “This is a catch-up opportunity for our industry. It is so accessible for us.” - Jonas Bordo
• “AI enables ‘rapid prototyping.’ It expedites the feedback loop for any new idea you want to create and test.” - Daniel Dubois

Favorite Quotes ??

• “Renters are willing to pay for kitchens and closets.” - Richard (Ricky) Pollack on RCLCO’s renters’ preferences survey
• “We listen without being defensive. We speak without being defensive.” - Dana Sprong on training at Vinebrook
• “People just want us to be real.” - Robert Lee Lee on keeping up company morale through tough times
• “Some years are good, some years are going to be better. It’s a lot like a vineyard.” - Paul Davey on the recent state of SFR
• “Bottom line is I work for the city. I can’t do anything without them. Utility companies are my boss. There are a lot of people that I work for.” - Steve Kimmelman , on a different mindset pertaining to regulation

BONUS: Team Bonding ??