The biggest deflationary spiral since 2008 is underway (Landlords cutting rent 40%)

The Renzo market is sending a massive deflation warning for 2026. We are going to see rents go negative next year, which is going to mean that more landlords are going to be forced to sell their properties and that we could even see the inflation calculation from the Bureau of Labor Statistics go way down. With CoStar reporting that U.S. apartment rents just saw their steepest October decline in more than 15 years. Meanwhile, Real Pages reporting that U.S. apartment prices just fell for the third straight month amid easing occupancy. Now, to be clear, these rents are still expensive in many markets and a lot of people are having problems still affording rent. However, the direction of the rental market now is clearly down. And when the rental market goes down, that means that the housing market more broadly goes down. And what you can see here is that home prices in blue are much more volatile than rents in red. However, they follow the same general trajectory. So if rents now are going to be going down over the next couple of years, it means it's more likely that home prices are also going to go down. Many of you have been waiting a long time for this. And in some markets, these rent cuts are getting especially aggressive. Apartment rents are down 8% year over year in Denver, 7.4% year over year in Austin, 5.9% year over year in Phoenix, 5.4% year over year in San Antonio. They're also down in Nashville, Raleigh, Dallas, Orlando, Jacksonville, and Charlotte. And now that apartment pipeline is delivering and leading to aggressive rent cuts and aggressive concessions, everyone. Another way that these landlords cut the rent without cutting the rent is by giving you what's called a concession, which can often be one month free, two months free, maybe even three or four months free off the rent. And I'm actually right now looking for an apartment in Nashville and I'm looking around at these different apartment buildings and it's shocking everyone how many of these apartment buildings that I'm looking at are giving away free rent. And first of all, you could just see like how many rentals there are. But if you click some of these, look how many are available. 296 units, 109 units, 334 units available. And they're giving two and a half months free rent. A studio costs $1,700 a month, while a one bedroom costs $2,300 a month. Folks, there's also these townhomes just to the east of Nashville, which are giving 12 weeks free rent. That's four months free rent on a three bed, three bath townhome, $2,700 a month. So four months free rent, that's going to cut your net rent to less than $2,000 a month. And many of these landlords are also having to refinance their debt now at higher interest rates, which is causing an increase in mortgage defaults and delinquencies. That's the other consequence here of this rental deflation in the market. We're seeing more apartment owners just basically hand back the keys to the bank and say, hey, we bought near the bubble at the peak of the bubble in 2021, 2022. We can't afford it right now. And we're going to just go into default. With TREP reporting that the CMBS delinquency rate climbs higher in October, 2025. And what we're going to focus on here is the multifamily delinquency rate in green. This is for apartment operators. It was 3.2% last October. Now the delinquency rate is 7%. It's more than doubled the CMBS delinquency rate for apartment operators in the last year. More and more of them are going into default. You can also see there's a lot of delinquencies for office buildings as well. But interestingly, the fastest growing default rate for CMBS, which is collateralized mortgage backed securities, fastest growing default rates in the multifamily space. And some people I know who are apartment operators are sending me deal decks they're getting from brokers that are basically showing these properties in REO foreclosure, a real estate owned opportunity. You can see these deal decks here of these actual apartment communities, which are in foreclosure. So this is something that's happening in real time right now. And again, I want to anchor this for you guys out there. If you're trying to understand how does this impact me as a home buyer or me as an investor, let me lay it all out for you. Declining rents, increasing foreclosures and mortgage defaults among apartment operators. It all means an increased likelihood that prices and the overall housing market are going to drop in 2026. And then we're just seeing outright housing deflation across both sides of the sector. Right now we have home buyer demand at a 30 year low and now rental demand is dropping at the same time. Think about what that actually means, everyone. That's almost somewhat counterintuitive. It almost seems like that shouldn't be able to happen. You would almost say to yourself, well, if the home buyer demand was really low, shouldn't the renter demand be high? You would think intuitively that would be the case, but no, that's not what's happening right now. The demand for both is going down at the same time. And there's three principal reasons for that. Number one is due to immigration. There's been a big slowdown in immigration this year. According to the Trump administration, over 2 million immigrants have left this country either through self deportation or actual deportation through ICE. Over 2 million have left. Obviously that's going to have some type of impact on the rental market and we're seeing that happen in real time. One metric I'm using to track this is work permit applications among immigrants. You can see there's been a 60% collapse in the last four months among work permit applications for immigrants. You can see here on this chart from the Brookings Institution. And what I think this correlates to probably everyone is rental demand from immigrants. If the work permit applications which had skyrocketed are now plummeting, that's going to mean fewer immigrants looking for apartments. And I think that's one of the reasons why you're seeing this slowdown in the rental market and deflating rents. However, everyone is student debt. There's a student debt crisis going on right now. And after three or four years where students didn't have to pay student loans, they now have to pay back their student loans. And as a result, a lot of people in the younger generation in their 20s and 30s are now having to make payments on their student loans that they didn't have to make the last five years, which leaves less leftover to afford rent. And I think you're seeing some people in their 20s and 30s are saying to themselves, maybe I can't afford that apartment on my own. I'm going to live with friends and family. You can see why on this graph, everyone. According to the Federal Reserve, the student loan default rate in red is now over 14%. Over 14% of student loan borrowers are now in default. That's the highest rate on record. At the same time, auto loan delinquencies, they've ticked down a bit, but they're still near the highest rate going back to 2010. Credit card delinquencies are also near the highest rate going back to 2010. And residential mortgage delinquencies, they've come back up kind of to their long-term norm. So the mortgage delinquencies are back to normal for people who own their house, but credit cards, auto loans, and student loan defaults are going through the roof. Who does that impact the most? That's the renter population or the would-be renter population. So this is another reason why rental demand is declining. But there's another reason why renters are also struggling right now, everyone, and that's a weak job market. Right now, if you graduate with a degree, particularly in finance or economics or maybe in tech, it's challenging to find a job right now, particularly for those who are under 30 and going into the workforce. And in fact, the unemployment rate for 16 to 24-year-olds has now spiked to above 10%. That's the highest unemployment rate for that age demographic since at least, if we exclude the pandemic, at least 2016. So it's the highest unemployment rate for 16 to 24-year-olds according to the BLS in a decade. Obviously, that's starting to weigh on rental demand. Now, I don't think it's all bad news for real estate investors, folks. And I actually still think there are some markets that are actually good to invest in and to buy rental properties. I'm going to talk about some of those markets right now using data from ReVenture app, particularly markets that actually still have cash flow and demographic growth. One such market, everyone, that I think a lot of you should look into if you're looking to move to an affordable place or you're an investor is Tuscaloosa, Alabama. Now, this is west of Birmingham. This is where the University of Alabama is. And you could buy a three-bed, two-bath house for $189,000. Your monthly payment on this puppy would be less than $1,000 a month, including taxes and insurance. That's right, everyone, less than $1,000 a month to own this house in Tuscaloosa, Alabama. This is an area that has decent job growth. It has stable demand drivers related to universities. If we go to ReVenture app, we could see and zoom in on Tuscaloosa here. It has a 9.1% cap rate, meaning a 9.1% unlevered return. That's actually really good. Why we like that at ReVenture is that that 9.8% cap rate is well above the 10-year treasury yield. So you're earning a big spread in Tuscaloosa on U.S. government bonds. That's why we like this market. Another area that ReVenture likes is also Pittsburgh, everyone. Pittsburgh, on the border of the Midwest and Northeast, you can see has a lot of homes, a lot of options for less than $200,000. Now, some of these homes are a bit older. However, they're livable, three-bed, one-bath, 1,300 square feet for $169,000. Your payment on this puppy would be $1,000 a month. You could see you could definitely use a little work. However, it looks in livable condition, looks in rentable condition, maybe some new carpet though. You can see most of the higher cap rate markets in the U.S., everyone, are here in this belt from the Midwest down to the Deep South. This is where you're going to get higher returns. If we actually look at the state view on cap rate, you can see the entire West Coast of the U.S. is kind of out as far as real estate cash flow. Your cap rates are less than 4%. Your rents just simply aren't high enough to justify the purchase price here in these states in blue. But in these states in red, it definitely makes more sense, particularly folks in a market like Tulsa, Oklahoma. You get a 6.2% cap rate in Tulsa. This is a market that has strong population growth, 5.9% the last five years. The home value to rent ratio is 11.8, which is pretty good. That's pretty close to that rule, that 1% rule, which says that basically you should net 1% of your purchase price in gross rental income per month. You can see again, if you look here in Tulsa, quite a few houses here under $200,000. Here's a three-bed, two-bath, 1,600 square feet for $130,000. Folks, your estimated payment on this would be $670,000 a month. $670,000 a month, and that's including taxes and insurance. Unbelievable. This is like GFC crash pricing. You can see the owner here listed about $40,000 below the Zestimate. Maybe they're hoping to drum up a bidding war. We'll see if this house actually sells for this amount or maybe goes above asking. Either way, you can see the value that still exists in certain parts of America. I'm going to show you later in this video, a couple more markets that ReVenture's data likes in terms of real estate investment, as well as buying a house that's affordable to live in as a home buyer. First, I want to talk about a big Wall Street investor now that seems to be sending some warnings about the housing market more broadly. This investor, they're one of the biggest in the US. They're actually the biggest publicly traded Wall Street landlord. Their name is Invitation Homes. Folks, their stock price is not doing so well right now. You can see Invitation Homes, who owns 85,000 homes. They were originally owned by Blackstone. Blackstone spun them off back in 2017. They became public. Their stock is down 17% in the last year. Why maybe is Invitation Homes' stock price going down? What does this mean for the housing market that America's largest publicly traded homeowner that owns single family homes is down 17% over the last year when the market's up over the last year? Well, folks, let's zoom in a little bit here. I went into Invitation Homes' earnings report, folks, and I dug through it and I found something really interesting. Invitation Homes is reporting that in the third quarter of 2025, they had negative new lease rent growth. Negative new lease rent growth, which means that on people who just moved into new Invitation Homes' homes, like new renters, rents were down compared to the previous renter. Now, you could see that this is very rare. Going back to 2017, Invitation Homes has actually never had a third quarter where new lease rent growth was negative until 2025. Normally, new lease rents are up 4.2% in the third quarter. They're down 0.6% here in the third quarter of 2025. Again, minus 0.6% is not a massive crash by any means, but you could see it's pretty alarming. Normally, these landlords are able to drive rent increases. During the pandemic, they were driving 18-15% new lease rent growth in a year. Now, it's negative. Again, why is it negative? Well, folks, it has to do with what we talked about before. Immigration is slowing. In fact, it's plummeting. Student debt is surging. It's a weak job market for new grads. We could see here, if we double-click here and look at some different markets where new leases are going down, we could see in Phoenix, new lease rents were down 4.6% for single-family homes. In Vegas, they were down 2%. In Tampa, they were down 4.2%. Basically, in every Florida market, Invitation Homes is cutting new lease rent. Additionally, in Houston and Dallas, new lease rent is down. Really, the only market that's really outperforming for Invitation Homes right now is Chicago. New lease rents in Chicago were up 11%. Oh, my goodness. Chicago, huge rent gains. We also have decent rent gains in Southern California as well as Seattle. In those markets, new lease rents on single-family homes are going up, but they're really going down in Florida, Texas, Vegas, Phoenix. That's a signal that you have time on your side. You should not feel pressured to rush into buying if the rents are going down because the only type of inflation that matters for the housing market is really rent inflation as well as income inflation, income growth and rent growth. Those are the two things that drive home prices. I see sometimes people get a little confused about this. They say, oh, maybe the housing market in 2026 is going to go up and I should buy today because of something like maybe we're going to have big inflation. Maybe the dollar is declining in value, some people say. Other people say, oh, well, look, the Trump administration is proposing some new mortgage plans like a 50-year mortgage. Maybe the demand is going to come back and I should buy now. Folks, just look at the rental market in your area. If rents are dropping, you will not see a huge rebound in buyer demand. What would cause a big rebound in buyer demand is if rents surge. So if rents were to go up five to 10%, like in Chicago, that's telling you, yes, you should buy. In Chicago, rents are up 10%. There's really no incentive to wait in Chicago. Chicago is not going to get any cheaper so long as rents are going up 10%. But now let's do a rapid fire round and look at some markets that I actually think are good places to buy. Earlier in this video, we talked about Tuscaloosa. We talked about Pittsburgh. We talked about Tulsa. Those are markets where you can get in and buy houses and buy investment properties at monthly payments of a thousand dollars a month or less. You get in for a thousand dollars a month on including your taxes and insurance. You're getting in at a valuation and a payment that makes it very easy for you to make money in the future as an investor. If your price and your payment are low enough and you're in a market that has growth potential, that's the calculation that's going to deliver you returns. It's also the calculation you want to see as a regular home buyer, that cheaper monthly payment, those cheaper prices. So what we're going to do right now, folks, is use the filters tool on ReVenture App. We're going to filter by a couple metrics. One is the home value to rent ratio. Now, this is a metric we track here at ReVenture App. It looks at the relationship of home values to rents. So if your home value to rent ratio goes way up, like in Dallas, that's a signal of a bubble, right? Home prices are trading for a higher multiple compared to rents than they used to be. We have a downward forecast. You probably want to avoid buying in those markets now or get a good deal. Let's look in lower home value to rent markets where the max home value to rent ratio is 12, meaning you can get that 1% rule. If you're in a market where the home value to rent ratio is less than 12, you can get that 1% rule, and it's a better investment thesis, better investment opportunity. So what are the markets where that's the case, everyone? You can see it's a lot of legacy markets here in upstate New York, down to Pittsburgh, down to Chicago, down to Illinois, even Detroit. We have some good value on rentals relative to prices. Also, if you go to Alabama, it's a great place. Alabama is one of my favorite markets to buy right now. I like Huntsville. I like Tuscaloosa. We also have Oklahoma. We also have Mississippi. We also have parts of Louisiana. We also have parts of South Carolina and North Carolina. But here's the thing, everyone. Not all of these markets, really, you would necessarily want to buy in the long run. So let's add another filter here. Let's add a filter for our long-term growth score on ReVentureApp. Our long-term growth score is a score that takes into account a bunch of different statistics related to long-term price appreciation, wealth, demographic growth, affordability, and valuation. The higher the long-term growth score, the better for you in the long run as an investor. What you can do, folks, is then hit table view, and it will give you a short list of areas that combine the criteria that you would like as an investor of better long-term growth, lower home value to rent ratio, as well as higher cap rate. From there, you can dive into the neighborhood and zip code level and apply these same filters so you could find the areas in 2026 that will be best to invest in and buy in for the long run for cash flow and for affordability. Use the investor metrics tab on ReVentureApp to isolate those higher cap rate, lower home value to income markets, while prioritizing places that still have good long-term growth. To access this data, head to www.reventure.app and sign up for a premium plan. Cost of the premium plan, everyone, is only $49 a month. Or if you would like to get a discount, sign up for that annual pass today to close out the year. That annual pass you can get for $33 a month, which is a 32% discount. Ultimately, folks, that's less than 0.1% of the cost of buying an investment property, and this data is going to help save you a lot more money than that. So head to www.reventure.app right now, everyone, and find the best markets to buy in 2026.