Apartment rents turned positive in August for the first time in four years. Positive meaning they went up instead of down. Positive meaning landlords can now brag about their 0.2% monthly win against inflation running at 2.8% annually. Positive meaning technically not negative.
The cause is less new supply. Developers stopped building apartments because construction costs exploded and financing dried up. So the solution to falling rents was not building more housing. Brilliant. Like curing a headache by removing your skull.
Vacancies dropped. Tenants who couldn't afford to move stayed put. Landlords confused captive customers with market demand. They called this pricing power. They will call the next downturn a black swan event.
Retail traders saw this headline and bought apartment REITs at the top. They read "rents turn positive" and heard "infinite upside." They skipped the part about four years of declines. They skipped the part about new supply pipelines restarting in 2027. They skipped reading entirely.
Technical analysts didn't care. The chart doesn't know what an apartment is. The chart doesn't know what rent is. The chart shows support at 187 and resistance at 194 and a descending triangle that broke bullish in July. That's the entire story. The headline is just noise for people who think fundamentals matter.
They don't. Rents could double or fall in half and the pattern would trade the same. Housing could become free and the 50-day moving average would still cross the 200-day moving average right on schedule. Landlords could start paying tenants to live there and momentum traders would still buy the breakout.
But sure, let's pretend this headline means something. Let's pretend supply and demand suddenly started working after a four-year vacation. Let's pretend the fundamentals-obsessed crowd won't get steamrolled the second the trend reverses and they're still calculating cap rates while their REITs drop 40%.
Photo by Aaron Sousa on Unsplash
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