“You will make better decisions once you begin thinking long-term rather than short-term,” a quote from business writer Adam Smith, succinctly sums up the Bonaventure philosophy. One bit of short-term thinking that has an outsize impact on the apartment industry is consumer sentiment. Everybody seems to echo Joey on Friends and ask, “How you doin’?” The thing is, a lot of investors are very emotional, just like consumers. Investors hear that consumers feel good, so they think, “Let’s get this deal started.’ Or they think themselves that the economy is good, so they say, “Let’s get this property started.”

It feels better to get started, but the reality is that the apartment building is going to last for 40 years. How many times is consumer sentiment going to yo-yo during those decades?

Banks are more comfortable providing capital when the economy feels good. But “feeling good” shouldn’t have a strong impact on a developer who plans to own a building for a long time. The emotional state of the financial markets affects whether people will provide capital, whether it’s from bank loans or equity investors, but market fundamentals have an impact, too.

Right now, supply and demand fundamentals for apartments are shifting. Some developers are behind schedule because of the continued shortages of labor and materials. Completion dates are slipping.

Now, normally, that might sound pretty negative, but in my view, this is positive. That’s especially true in certain markets where there’s been a big jump in supply relative to the existing product base. While no one loves the idea of construction delays, it will be helpful to elongate the delivery cycle versus everyone showing up to market at the same exact time with new units.

While that may be healthier in the long run, in the short term this may mean that consumers miss out on a few discounts because people won’t have to compete as heavily on price.

Here’s where that long-term mindset is valuable: even though the lack of concessions is temporarily bad for the consumer, eventually this scenario is good for them. Ultimately the cure for higher rent prices is more apartment supply. Apartment supply will increase when capital providers can predictably project that they’re going to get a reasonable rate of return.

Think about it: if there were a situation where there were mass concessions, that would affect the availability of capital for the next round of starts. On the other hand, if you had a smoother delivery and less price volatility that would likely reinforce to capital providers that yes, we can continue to supply capital to this business. That will produce more housing, which in the long run, is better for consumers – and should make them feel good.