The Sun Belt Rental Reckoning

The Boom Is Over and the Data is Now Impossible to Ignore

Fortune recently named Charlotte among the metros leading the national rent slide, and the Midwest investors who quietly sat out the Sun Belt frenzy are now openly saying I told you so. We’re not going to argue with them. We’ve been saying the same thing since 2023, and most owners who heard it pushed back. Population growth was strong. Cranes were everywhere. Job announcements rolled in monthly. How could rents possibly be sliding?

The Sun Belt boom is over. Midwest real-estate investors say ‘I told you so’ | Fortune

They were sliding because supply finally caught up, then overshot. The contradiction owners are wrestling with right now, vibrant growing cities with falling rents, is not actually a contradiction. It’s what happens when a region absorbs roughly a decade of construction in 36 months while interest rates simultaneously freeze the for-sale market and push more inventory into the rental column.

The data we were watching in early 2023, our own portfolio days-on-market creeping up, concession requests climbing, renewal increases shrinking, has now shown up in every major national index. The boom is over.  Though we might already be at the bottom this winter. The question for owners isn’t whether to accept that. It’s what to do about it.

Three Indexes, One Message: Rents Are Down

The three leading national rent indexes, Zillow, Apartment List, and multiple Federal Reserve housing inflation measurements, don’t always agree on the magnitude of a move, but they do agree on direction. All have been showing softening rents since late 2023, with the South and Southeast underperforming the rest of the country by a wide margin. – That said, nationally you see a clear uptick over the past few months, and we hope that will show up in the Sunbelt in 2027.

The slide has been steeper than anything we’ve operated through in nearly two decades of property management. We’ve seen seasonal pullbacks. We’ve seen 2008 and its aftermath. We have not seen a sustained, multi-year softening in single-family rents at this scale. That’s not hyperbole. It’s the operational reality we’re pricing into every listing right now.  That said, there is still a surprisingly strong market for certain home types and areas and we outlined that issue here.

Rentals Are Hyper-Local Now. Experience Matters More Than Ever

The point isn’t which index is right. The point is that three independent methodologies all looking at different data sources are telling the same story.

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Why Population Growth Is Not Saving Rents

The most common owner pushback we get goes something like this: but Charlotte added more people than almost any metro in the country last year, how can rents possibly be down? It’s a very fair question with a straightforward answer. Supply outran demand.  That said, it’s even hard for us to grasp how supply got that out of hand all of a sudden.  The COVID years delivered a lot of wild issues.

The 2020 through 2022 building boom dumped a historic volume of apartment units onto Sun Belt markets, and most of that delivery is hitting the market in 2023, 2024, and 2025.  That drives house rents down also, but they are definitely faring much better.   Multi-family operators have been offering concessions, free months, gift cards, reduced deposits, and those concessions effectively lower the true rental rate residents will pay anywhere. That apartment overhang spills directly into the single-family rental column. A renter that can lease a brand-new two-bedroom apartment with a month free and resort-style amenities is going to think twice about a three-bedroom single-family home priced at the top of the market.

Within our Carolinas footprint, Raleigh is holding up slightly better than Charlotte. The state employment base, university anchors, and a more measured construction cycle have given Raleigh a thinner layer of insulation. But thinner insulation is still insulation, not immunity. Both markets are soft. Owners who price as if it’s still 2022 are going to spend the next four months staring at an empty listing.

Greensboro and Winston-Salem have always tended to march to their own drum, but we have certainly seen rents on the high end increase dramatically over the past few years.  It seems bumpier than most and hard to pin down but there’s no doubt the industry growth is showing up in rental rates above $2,000.

Wilmington boomed for about a year after the major cities, but things slowed down fast.  Still, it’s probably down a bit less than Raleigh and Charlotte.

Quality Homes Priced Right Still Rent Fast

The market isn’t dead. We need to say that clearly because some of our owners read the headlines and assume nothing is moving. In peak season, April through July, well-prepared and correctly-priced homes still rent in under three weeks. That hasn’t changed.

What has changed is the variance between strong listings and weak ones. The gap between a home that rents in 14 days and a home that sits 90 days is wider than we’ve seen since the company’s earliest days. There’s no middle ground anymore. You’re either in the right price bracket with the right presentation, or you’re invisible.

Quality residents have always sought value. In a soft market, they have more options, so they’re harder to win and easier to lose. The fundamentals haven’t changed. The margin for error has.

Rentals Are Hyper-Local Now. Experience Matters More Than Ever

Vacancy Costs Roughly $150 a Day. Pricing Mistakes Compound Fast

On a home renting for around $2,500 a month, every day of vacancy costs the owner roughly $83 in lost rent. Add property taxes, insurance, HOA dues, utilities the owner has to carry while vacant, and the marketing cost of an extended listing, and the real all-in daily cost of vacancy is closer to $100 to $150 a day for most of our portfolio. Higher on premium homes.

Now run the math on overpricing. An owner who insists on $2,650 instead of $2,500 because they want to test the market is risking real money. If that test extends vacancy by 30 days, they’ve burned roughly $3,000 to $4,500 chasing $150 a month in extra rent. They’d need over two years of that higher rate to break even, assuming the resident stays that long, which in a soft market they often don’t because they realize they overpaid and bolt at renewal.  Furthermore, if that test crosses one of the crucial timing thresholds in our industry such as avoiding vacancy in winter and during back to school season, the costs are usually double.

This isn’t theoretical. We run this conversation with owners every week. The math always tells the same story. Overpricing in a soft market doesn’t preserve your rent. It destroys performance, one vacant day at a time.

Hyper-Local Now Means Hyper-Specialized

We’ve written before that real estate is hyper-local. In a soft market that becomes hyper-specialized. The owner who could get away with a Zillow Rent Zestimate and a casual listing in 2021 is the same owner watching that home sit empty for three months in 2025.

National algorithms missed this entire down cycle. They were still reporting flat or rising rents in markets where our own portfolio was already showing concession requests and longer days on market. The algorithms are trained on lagging data. They can’t see what we see on a Tuesday morning when ten owners are deciding whether to accept a $50 reduction or sit another two weeks.

This environment rewards data-driven regional operators who measure everything and punishes both hobbyist landlords and the national volume firms that prioritize unit count over per-door performance. We’ve said for years that mom-and-pop investors compete by being more disciplined, more responsive, and more local than the Wall Street players. That advantage is wider right now than it has been in years.

We Expect a Recovery in 2027

Owners who hang on through this soft cycle, who price correctly, who keep their homes presentable, and who don’t panic-sell into a cooled for-sale market, are positioning themselves for the next leg up. That’s not a prediction with a timeline attached. It’s a structural read on a region whose long-term drivers remain intact even while the short-term math is pretty painful, but the recovery as we have seen often in recent years is often extreme.

The long game usually wins. It almost always does in housing.