At Inman Connect Las Vegas, July 30-Aug. 1 2024, the noise and misinformation will be banished, all your big questions will be answered, and new business opportunities will be revealed. Join us.
Real estate billionaire Barry Sternlicht thinks rents will increase significantly in 2026, and the federal reserve is to blame.
In an interview with CNBC, the chief executive and chairman of Sternwood Capital blamed Federal Reserve chief Jerome Powell’s interest rate campaign for killing activity in the multifamily sector, which he argued will eventually lead to a precipitous drop off in available apartments and a skyrocketing of rents.
“This is my problem with Powell: his policy has now crushed multifamily starts. We need houses,” Sternlicht said. “With only 220,000 houses coming in [2026], I will guarantee you rents will go up in ’26 unless there’s a massive recession.”
Rents have largely stagnated on a national level, but have dropped off noticeably in Sun Belt markets that experienced building booms post-pandemic, according to Redfin data.
“The Sunbelt has built a ton of new apartments in recent years, partly to meet the surge in demand brought on by the flood of people who moved in during the pandemic housing boom. But the boom is over, and now property owners are struggling to fill vacancies, which is causing rents to fall,” Redfin Senior Economist Sheharyar Bokhari said last month.
“The good news is that the uptick in housing supply in the Subelt has improved affordability for renters, which can be a lesson for other American cities grappling with housing affordability challenges.”
As in other times of strain, a disconnect grows between buyers and sellers in the real estate market, Sternlicht argued in the interview, with buyers hunting for the best bargain and sellers looking for prices they could have gotten a year earlier. But, he pointed out, that gap is shrinking, meaning the market may be on its way to a healthier place.
“The spreads are coming in, which means the markets are healing — the future is getting clearer, particularly for apartments,” Sternlicht said.
