The Q3'25 apartment data is in. Bottom line: It's not the big rebound investors hoped to see. It's also not the big plunge doomsday-ers hoped to see. Highlights: -- Demand (absorption) is moderating from crazy highs, but that was widely expected due to a) supply slowing, and absorption correlates with supply; and b) off-the-charts numbers are never sustainable. Notably: There's more dis-alignment than usual among data providers on Q3 absorption. Won't go too deep into the weeds here, but a lot of that likely traces to methodology differences around how lease-up absorption gets calc'd, and should balance out over time. -- Overall occupancy is improving a bit as the big wave of supply works through initial lease-up, BUT stabilized occupancy (which excludes new lease-ups not yet stabilized) ticked down a bit in Q3 -- reflecting a hyper competitive leasing environment where renters have a ton of options thanks to the highest levels of new supply in nearly a half century. -- Rents continue to slump as operators compete for leases. Rents almost always fall a bit in September (fell MoM in all but one of the last 10 years... the exception being 2021), but the Sept 2025 cut (-0.6%) was a tick more than last year, and more than typical. And yet... also some signals of a healthy market and healthy renter base: -- Renters continue to renew leases at unusually high levels. Retention went up again in Q3. That is not something we'd see in a typical demand-side slowdown. No signs of mass move-outs or of renters doubling up to save cash. -- Renewal rents continue to climb at a normal-ish rate of 3.7% nationally. -- Renter households signing a new lease in a market-rate apartment came in with rent-to-income ratios of 21.9%, which was a 6-year low. Good sign that affordability not an issue for the market-rate market of mid/upper income renters. (Note: Affordability remains far more of a challenge at lower end of market.) -- Renters continue to sign longer-than-normal lease terms, which you wouldn't expect to see if a lot of renters were uncertain about their near future. Also a sign operators are likely incentivizing longer lease terms to protect occupancy. -- Also of note: Total construction fell to a 10+ year low, and likely to trend down further. Bottom line: Lots of mixed signals. But overall it appears the apartment market and its renters are in relatively healthy shape, with the primary headwind for investors (and tailwind for renters) being the generational high in apartment supply. Certainly weak consumer confidence and a soft labor market likely contributing factors to some degree, and if sustained, that will of course delay the eventual rebound. Given we're now in the seasonally slower months, we may not get a clearer direction on the apartment sector until the spring leasing season kicks into gear in March/April.

One big theme in apartment REIT calls this quarter: There's more of a "flight to quality" than a "flight to affordability" among mid/upper income renters. Demand is going UP market to pricier new construction and to renovated units. MAA, as example, said their renovated units are leasing 9.5 days faster (on average) than non-renovated unit -- and renters are willing and able to pay ~$100/month more for it. MAA said they'll do 6k unit renovations this year. At same time, rent-to-income ratios continue to decline. Camden (doing 3k unit renovations this year) said their rent-to-income ratios for new renters are now down below 19%. Good signs on renter financial heath. Reminder: None of this is to suggest there aren't lower-income renters needing affordable housing. We obviously have a severe shortage of quality, affordable, available affordable housing. But at the same time, we also have very robust demand from mid/upper income households willing/able to spend on high-quality apartments.