these landlords are on the verge of bankruptcy of these apartment buildings behind me and across America the luxury rental market is crashing across the US these buildings are sitting empty and these landlords are cutting rent as much as 40% and they still can’t rent these units and the way that these apartment developers got in trouble was during the pandemic they took out all this debt to build these skyscrapers and they’re having to give 3 months free rent and the reason they’re having to give this free rent is because when you look at the rental prices they’re really high a studio in this apartment goes for around 15600 a month for only like 450 ft a one-bedroom starts at 1950 a two-bedroom starts at 3250 and they thought that people would continue to pay these high rents that they did during the pandemic but now they’re not in many cases people in cities like Nashville are moving back to where they came from during the pandemic leaving all these vacancies and I’m here at another luxury property that sitting completely vacant everyone and on this property they’re giving 3 months free rent that’s about a 25% rental discount on a 12-month lease and I want to take a second to explain why this is such a big problem for these landlords the rents are going down at a time when the cost of ownership for landlords is going up so we know that the property taxes are going up the insurance is going up but really the big issue for these landlords is the wall of debt that’s hitting the commercial property market right now according to the The Mortgage Bankers Association 20% of all the outstanding commercial mortgage and multif family debt is going to mature in 2025 which means that 20% of that debt is going to get refinanced at much higher interest in mortgage rates when properties like this went under construction you know they were taking out debt at 3% interest rates now the interest rates are 7% so when they go to refinance their cost of interest in debt service is going to double and that’s going to immediately put many of them underwater on their mortgage and unable to afford the payments at the same time the values of these multif Family Properties are plummeting according to Green Street the average value of commercial real estate’s gone down 18% from peak in 2022 there was a slight Rebound in the value late last year when interest rates dropped but now they’ve stopped recovering and they might even go down again now that rates are staying higher for longer and what’s concerning everyone is that it’s not only lease ups and the new properties that are giving away all this free rent it’s also the existing property so this one behind me here in Green Hills in Nashville this property was delivered like five or six years ago this property has been around for a while it’s a luxury property and they charge around 3500 a month for a two-bedroom around 2,300 a month for a one bedroom so the rents are more expensive however yet they’re still offering 2 months free rent 5 years after they opened I mean that’s crazy everyone if you talk to anyone one in the multif family landlord or apartment space and you tell them you’re going to be offering two months free rent 5 years after you buy or deliver your property they’re going to tell you I wouldn’t want to do that deal yet that’s what we’re seeing happen here in Nashville and folks now I’m going to take you around to different neighborhoods in Nashville and show you just how much the rents are dropping and give you a little tour of the city I actually used to live in Nashville so I know this area pretty well and you’re going to be shocked at just how much the rents are dropping and one of the biggest things you need to understand out there is what concessions mean this concessions are happening all over Nashville and other cities Across America in the apartment market and what a concession is is when the landlord instead of cutting the rent on face value instead they give free rent so they give one month free rent two months free rent maybe three months free rent in Nashville a lot of the buildings are giving 3 months free rent in fact some are even giving four months free rent and I want you guys to think about that so four months free rent rent on a 12-month lease is equivalent to a 33% net discount in rent a 3-month concession is equivalent to a 25% net discount and in some cases they’re having to do crazy stuff like they’re throwing in electric scooters or throwing in gift cards and the reason they’re getting so desperate is because many of these landlords are on the verge of having to refinance their mortgage there’s a massive maturity wall in the commercial real estate industry right now and particularly in multif family where there’s a lot of debt coming due and they’re trying to get what’s called heads in beds because the lenders out there would rather just see some level of occupancy even if the net rent is lower and it’s causing basically a bloodbath in the Nashville apartment Market it’s causing a bloodbath in the Austin Texas Apartment market and actually I have a funny little anecdote everyone my old apartment in Nashville I lived in a pretty nice two-bedroom unit that was 3,800 a month when I rented it in early 2023 now I moved out about or eight months ago and after I moved out do you know what they cut the rent to everyone they cut the rent to 2600 a month they literally cut it 33% on a face value basis from what I was paying and they were still also giving concessions and so that’s just like a funny personal example that I experienced and saw but I want to give you guys a quick update on the single family housing market we’re going to get back to talking about the rentals in a second but first let’s talk about some new news on what’s going on with home buyer demand in America and this news is not very good the National Association of Realtors just came out with a report saying that pending home sales in January 2025 fell to their lowest level on record showing you that this housing market here in 2025 continues to get worse from a buyer demand standpoint which increases the odds that prices drop in many cities Across America maybe even in this neighborhood prices are going to drop in the future I’m standing right now in Franklin in Tennessee which is about 30 minutes south of Nashville and this is actually one of the wealthiest neighborhoods in America the median household income here is around 140,000 in Williamson County south of Nashville and the prices have still been going up in this area however if the demand keeps dropping maybe the prices here will drop as well the other report that came out this week was from the US Census Bureau they showed that new home sales plunged 11% in January so home Builder sales went down 11% month over month and I think many of these sellers are starting to wake up on the US housing market however there’s a very bifurcated nature to the beginning of this housing downturn where in certain cities and neighborhoods prices are dropping but in other cities and neighborhoods prices aren’t dropping and where I am right now prices are up four or 5% year-over-year here in Franklin Tennessee this is a location a lot of people have been flocking to since the pandemic in fact I just found a house on the market for sale on this street this is a four bed three bath home 2500 ft can you guess how much it’s listed for take a look at the pictures on the inside this house is listed for around 770 Grand and so that shows you the price points here south of Nashville while the rental market in downtown Nashville is crashing the for sale Market here to the South is still holding up and interestingly Williamson County Tennessee the county I’m standing in right now is actually the 11th most expensive County in America the typical home value here is more expensive than the the value in Los Angeles which is absolutely crazy this is the only County that’s not on the coasts that’s in the top 20 in terms of how expensive it is to buy a house and we continue to see this trend where the wealthier the area is the better it’s doing from a housing market and economic standpoint uh I was in Atlanta and showed you some wealthy areas there that were still doing well I was in Dallas I showed some wealthy areas there that we’re holding up so the the wealthy areas where people have a lot of money home prices are stable or continuing to grow while the more low-income areas where people don’t have as much money and where there’s a lot of investors the prices are dropping in Nashville home prices are dropping around the downtown area around uh Germantown around North Nashville that’s where the values are already officially going down and no doubt the declining rental market has something to do with that so this area here where we originally started the video This is called The Gulch in Nashville and this is probably where you know some of the biggest rent cuts are because of all the new Supply you can see there’s tons of cranes but we’re going to go over there now to Downtown Nashville and see what’s happening so I’m here in the middle of downtown Nashville where the rents are dropping you can see why look at all of those brand new buildings many of them are apartment buildings we got one here we got one here we have even more being built over there and right now Across America there’s 750,000 multif Family Apartments actively under construction that’s close to a record high it’s the highest in 50 years so there’s still a lot of Supply in the pipeline from these apartment developers however that supply has gone down 2 years ago there was over a million multif family units under construction slowly but surely that pipeline is getting delivered and one interesting thing I actually think about this luxury rental crash is what its impact is going to be on the economy CU in many of these cities all this apartment construction is juicing the local economy it brings in lots of jobs there’s the construction jobs there’s the consulting jobs the architect jobs and you can see historically when we see downturns in the number of units under construction that typically precedes a recession so I have to wonder what’s going to happen in Nashville’s economy over the next 1 to two years as these declining rents start to lead to fewer units in the pipeline which is going to lead to lower job creation potentially job contraction I think a lot of these Sun Belt housing markets like a Nashville like a Charlotte like an Atlanta like a Tampa Like a Phoenix they’re all exposed to an economic slowdown as this backlog of multif family units gets worked through the system these developers aren’t going to build anymore with their rents dropping so much now one of the main reasons why Nashville and other big sunb cities are experiencing this luxury rental crash is because they built too many apartment buildings during the pandemic they permitted too many in the case of downtown Nashville which is behind me here the supply growth in in the downtown Market has tripled in the the last decade so all these new apartment buildings you can see behind me there’s even more apartment buildings and then you can see over there by the football stadium they’re building another Stadium which is going to have more apartment buildings near it and so all this Supply is led to these landlords competing against each other for tenants and there’s just simply not enough people willing to move into these buildings and pay these luxury rents and so thus they’re having to cut the rent give the huge concessions give four months free in some cases there’s a building here in downtown Nashville that was giving four months free rent last year and apparently they were also giving a free electric scooter to anyone who rented in addition to 4 months off and in some cases these rents are getting pretty cheap everyone like in that same building a one-bedroom goes for 1,500 you can get 3 months free today which lowers the net rent to 1,200 a month for a one-bedroom to live in a cool downtown area that’s actually pretty compelling and in some cases these net rents are back to pre pandemic pricing the apartment rents across the Nashville Metro are down from 1511 on average to 1377 a month a 9% decline from Peak the vacancy rates on average are up to 8% but in this downtown area where they’re building so many of these apartments the vacancy rates are scratching 20% and in some of these buildings like when this delivers it’s going to be another 200 vacant units onto the market and according to data from apartment list the markets where the rents have dropped the most are predominantly in the Sun Belt we’re talking Austin we’re talking Dallas Phoenix Vegas Nashville and a lot of places in Florida especially the rents are dropping all across Florida this luxury rental crash says that rents are now dropping in many areas in America which is going to make it harder to buy investment properties if rents are going down it’s going to be really difficult to uh make profit as an investor especially with expenses going up in fact cap rates across the US housing market are the lowest they’ve been in decades the average cap rate right now is 4.5% for an investment property whether it’s a small house or a big multif family property the cap rates are still really low meaning it’s hard to make a return so if you are an investor or would be investor and you want to get started make sure to do the math on if the investment makes sense run the numbers on the rent the expenses and how much your debt cost is going to be and don’t overextend yourself and buy a property that doesn’t cash flow make sure the property cash flows I believe these declining rents are going to help you out in 2025 as a home buyer because it’s likely going to mean declining prices in certain markets when rents go down prices also tend to go down it’s a signal of a softening Market overall and if you’re a renter this is good news for you if you live in one of these cities like Nashville or Austin or Phoenix the rents are getting cheaper and if your landlord tries to jack up your rent and you live in one of those cities make sure to send them some of the data from sources like apartment list or red fin that’s showing that the rents are going down now one thing you guys are going to make sure that you do is go to ww.
reventure doapp so you can research all the data that I showed you in this video home price growth year-over-year inventory Trends and access that home price forecast score for your city in zip code in 2025 this home price forecast score is ranked from 0 to 100 and helps you understand where prices are going in the next year as a home buyer investor very valuable data and information in this uncertain Market you can access that price forecast score at ww. reventure doapp under a Premium plan for $39 a month or $3.99 a year at a 15% discount.