Rents could surprise to the upside in 2026, but not because of another demand shock or an investor-fueled pricing cycle. Instead, rental housing economist Jay Parsons argues in his podcast, Rent Roll, the setup is a quieter but more durable combination of higher nominal incomes, constrained single-family alternatives, and a labor market that only needs to be "normal" to reset the apartment bull case.
Why rents may still have room to run
Parsons' core argument starts with something many multifamily owners are seeing in their own data: in key coastal and tech markets, nominal incomes have grown far faster than asking rents since 2020. In downtown San Francisco, for example, he notes that his firm's portfolio rents are still only about 4% to 6% above pre‑Covid levels, even as household incomes have climbed roughly 30% over the same period. The result is that rent‑to‑income ratios have not expanded in line with the political narrative around "unaffordable" rents; in some cases, they have actually improved.
That gap, Parsons contends, creates "space for rents to go up" in 2026 and beyond, particularly in markets where supply pressure is fading and wage gains have proved sticky.
The implication for investors is that nominal rent growth does not necessarily require an aggressive macro tailwind from here; in some metros, it may simply be a matter of landlords carefully raising rents to match the income growth already seen. The caveat, he adds, is that operators will have to "provide great service and be careful" in how they execute on that pricing power in a political environment still focused on housing costs.
A measured bull case for apartments
That same pragmatism runs through Parsons' broader bull case for the multifamily asset class. He does not predicate outperformance on a roaring economy or outsized job creation, but on something more modest: a slightly firmer labor market layered on top of a meaningfully tighter supply backdrop. "The bull case, which we didn't put in our guidance but is certainly possible, is that you get a little bit of job growth, you get a little bit of firming of the job market," he says.
What matters, in his view, is the interaction between that "normal" job environment and the structural shortage in single‑family housing, where both prices and the cost of capital have locked many would‑be owners into renting for longer.
With single‑family "still really expensive" and far less new supply in that segment, even a garden‑variety year for employment layered onto diminished multifamily deliveries could translate into "a decent number and a really good number embedded [in] new lease going into 27." For investors, that suggests the possibility of respectable rent and NOI growth without requiring a heroic macro scenario.
Portfolio strategy: diversification and humility
Parsons' comments on rent headroom and the apartment bull case ultimately feed into his views on portfolio construction. He emphasizes maintaining a diversified footprint across markets with different demand, supply and regulatory profiles, and he is explicit about the need for "a little balance and, frankly, a little humility about knowing for sure what the right drive is."
In practice, that means not over‑concentrating capital in any single narrative—whether it was the Sun Belt growth trade earlier in the cycle or, more recently, the rebound story in coastal tech hubs.
He points to Austin and San Francisco as mirror images that underscore the risk of overconfidence. In Austin, rents soared and then rolled over as a wave of new supply hit, while in San Francisco, rents lagged even as incomes recovered and tech employment stabilized.
A diversified portfolio, he suggests, smooths out those local swings and gives owners exposure to different points in the cycle at the same time. The through‑line across his remarks is that the same fundamentals that could support higher rents in 2026—income growth, constrained single‑family options, and selective supply pressure—will not show up uniformly, so capital allocation still matters.
Betting on AI‑levered metros
Nowhere is that capital allocation view more apparent than in where Parsons wants to be overweight. He is unabashedly bullish on the markets he sees as the core beneficiaries of AI‑driven job growth and the broader knowledge economy, and his firm's portfolio is already tilted accordingly.
"We love our San Francisco exposure. We think it's the heart of AI. We never gave up on San Francisco like others," he says, noting that the company's NOI is roughly 30% concentrated in New York and San Francisco.
Parsons highlights a major redevelopment roughly a mile and a half from Apple's headquarters as emblematic of the type of infill, jobs‑rich locations he wants to own for the long term.
Beyond the Bay Area, he singles out parts of the East Bay, select New York suburbs and the Virginia suburbs of Washington, D.C., where very expensive single‑family housing and constrained for‑sale inventory reinforce rental demand.
What ties these markets together, in his telling, is that they are "levered to the best part of the knowledge economy" and positioned to benefit most from AI while facing relatively low displacement risk from the technology itself.
For multifamily investors, the message is less about a single trade and more about alignment: align with income growth rather than headlines, with normal job markets rather than boom‑and‑bust cycles, and with metros where AI‑era employment and single‑family constraints quietly extend the runway for rent growth into 2026 and beyond.
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