The K-Shaped Economy Comes for Multifamily
The industry is increasingly bifurcated by asset class and income, industry economist Jay Parsons observed at an NMHC webinar.
In the National Multifamily Housing Council’s latest quarterly webinar, rental housing economist Jay Parsons argued that the industry is increasingly bifurcated right now, with oversupplied markets in particular seeing the biggest divergence. Chris Bruen, NMHC’s senior director of research and chief economist, moderated the discussion.
This separation comes from renters’ desire to be in nicer, more amenitized properties. In markets that have seen a large number of deliveries in recent years, such as the Sun Belt, concessions are enabling residents to trade up for higher-quality communities. Class C renters might move into Class B assets, while Class B residents can now afford Class A or A- communities.
According to Parsons, this means that Class C buildings in those markets are seeing rent cuts and loss of investor interest.
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Referring to a March 2026 report from Harvard’s Joint Center for Housing Studies, the economist also said he’s observing a bifurcation by income, where higher-income renters—what he called households making more than $75,000 per year—are driving most industry demand and spending around 20 percent of their income on rent.
Lower-income renters—those making less than $30,000 per year— are, meanwhile, often spending more than 80 percent of their income on rent and are not being served by market-rate housing at all, simply because what they would be able to afford would likely not be able to cover operating costs.
“It’s not so much a story that all renters are struggling,” Parsons said, “so much as it’s a story of this K-shaped economy—the haves and have-nots.”
Easy to find debt, hard to find equity
The bottleneck in multifamily deals right now is equity, not debt, Parsons argued, which is a result of investor hesitation.
“Investors hate uncertainty,” Parsons said. “The Middle East conflict, gas prices and now the questions swirling about the economy and the weak job numbers of late certainly add some uncertainty.”
Another concern for investors, according to Parsons, is the fact that rent growth remains sluggish.
“Everyone’s been waiting for this rent rebound that just hasn’t hit yet,” he said.
Policy remains a challenge—and a risk
New housing policies at all levels of government continue to pose challenges for the industry, and according to Parsons, they also represent its biggest risk.
While market risks, such as interest rates, supply changes and economic factors, usually emerge gradually, policy risks—like rent control laws—come about more suddenly, are harder to forecast and often lead to longer-term impacts.
And rent control is not the only policy trend affecting the industry. Laws passed in 2023 in Colorado, for instance, restrict the ways that landlords can screen prospects, which Parsons said could lead to more delinquencies and eviction filings.
At the federal level, the 21st Century ROAD to Housing Act has also raised concerns because of its provisions that would hamper the single-family rental and build-to-rent industries.
Parsons said that piece of legislation was “hijacked by conspiracy theorists,” though it still must receive final congressional approval before being signed into law. On April 22, a bipartisan group of 76 representatives issued a call for the SFR/BTR provisions to be stripped from the bill.
“The worst thing for anybody in investments is that the rules change on you midstream,” Parsons said, “and all of a sudden your pro forma has been torpedoed.”
