Over the past few years, US real estate investors converged on a consensus: if you want to be a landlord, go to a red state. Texas, Florida, Arizona. Light-touch government, rents free to rise. Blue states have rent control, endless permitting, expensive labor, and heavy regulation, which makes them look like the last place you would want to invest.
But if you are not an individual landlord with a few rentals and instead invest in or develop hundreds of apartment units, my conclusion is the opposite: blue states are the landlord's paradise.
The Red State's Biggest Advantage Is Also Its Biggest Risk
The one thing free markets do best is eliminate excess profit. Every red state believes in free-market economics, and that is precisely the problem.
Take Austin, Texas. According to Pew Charitable Trusts, Austin's median rent at the end of 2021 was $1,546, running 15% above the national median. By January 2026 it had fallen to $1,296, 4% below the national average.
Austin did not lose population. Between 2022 and 2024 it added roughly 18,000 residents.
Population up, rent down. There is only one explanation: supply grew faster than demand. According to Redfin and US Census Bureau data, from April 2024 to March 2025 Austin permitted 64.5 multifamily units per 10,000 residents, the highest rate in the country.
Austin does not lack demand. The moment profit appears, developers flood in. Two years later the new apartments deliver all at once, compete with each other, and the profit is competed away.
The biggest advantage of a red state is how easily you can enter. The biggest risk of a red state is that everyone else can enter just as easily.
Rent Control Actually Pushes New Apartment Rents Higher
Most investors avoid blue states because rent control caps annual increases.
But for a developer, a newly built apartment and a stabilized building full of long-tenured tenants are two entirely different assets.
In California, the Tenant Protection Act exempts buildings less than 15 years old. New construction is free of rent-increase caps for its first 15 years on the market. More importantly, rent control restricts what you can charge sitting tenants, not what you can ask on a newly listed unit.
Because rents on long-term tenants rise slowly, owners increasingly sell, move in themselves, or exit the rental market altogether. The result is a curious split: incumbent tenants pay suppressed rents while new tenants face higher market rents.
In 2019 three Stanford economists published a rent control study in the American Economic Review. They found that San Francisco's rent control reduced rental housing supply by 15% and, perversely, pushed market rents up by 10%.
What I develop is newly built apartments with no lease history and no roster of below-market legacy tenants. The day the building comes online, I can lease at full market rate.
Apply the study's finding. If rent control lifts market rents by 10%, and that translates to $300 per month, a 100-unit building generates $360,000 in additional annual rent. At a 5% cap rate, that is $7.2 million of additional value on the sale.
Government intervention in blue states directly raises rents on new apartments, which turns into a tailwind for my projects.
Blue State Construction Difficulty Is Exactly What Builds My Moat
Red state housing policy is market-driven; blue state housing policy is built on barriers. Building in a blue state costs more at every step, from entitlement to labor to lease-up.
According to Bureau of Labor Statistics data, the average construction wage in Seattle is $42 per hour versus $27 in Austin, a 60% difference.
Add the permitting complexity unique to blue states, where many projects take a year or two to move from land entitlement to building permit. A friend developing a multifamily project in California was told the site had historically hosted bats, and he spent two years demonstrating that his building would not disturb their habitat.
So most developers see blue states as high cost, long timeline, high risk. If you build conventionally, that assessment is correct.
But modular development, which I have spent the past several years working on, solves exactly those three problems. I move roughly 80% of the construction volume into the factory so that factory production and site work advance in parallel.
On my own 120-unit Burlington project, construction cost fell from $280 per square foot site-built to $200, and once the building permit was issued the building was complete and leasing in five months rather than the two years conventional construction requires. The full process, cost breakdown, and current project progress live on my modular development page, so I will not expand on it here.
The takeaway is one sentence: the biggest obstacle in a blue state is exactly the problem modular is best at solving. For everyone else, blue states mean high costs and long timelines. For us, those barriers reduce competition.
The Most Valuable Asset in a Blue State Is a Longer Supply Vacuum
According to National Association of Home Builders data, US multifamily completions sat in the high range of 500,000 units in 2025, but multifamily starts have fallen from a 2022 peak of roughly 550,000 units to about 300,000 in 2024, a decline of nearly 40% to 45%, and they continued to fall through 2025 and 2026.
The reason is straightforward. Multifamily takes about three years from entitlement to completion. Low pandemic-era rates from 2020 to 2022 produced a collective rush, starts peaked in 2022, and those buildings all delivered in 2025, which is why last year was the supply peak. After 2022, high rates cut new starts in half, so beginning this year every state enters a housing supply vacuum.
The catch is that the vacuum lasts very different lengths of time in red states versus blue states.
In a market like Austin, the moment rents rise and project economics recover, developers come straight back. Entitlement is fast, permits are fast, and construction cycles are relatively short, so a wave of new apartments delivers within two years.
In blue states, conservative policy and slow administration mean that land acquisition, design, entitlement, permitting, and construction take at least four years. Even if market rents rise sharply this year, meaningful new delivery is at least four years away.
That gap is the arbitrage opportunity for modular developers. We are buying land at the bottom, and one year later, when the building is finished, rents are at the top. During the blue state's long supply recovery, we get to market first. While conventional developers are still permitting, financing, or framing, we are already leasing.
That is the timing mismatch I actually care about. Red state opportunities get matched quickly. Blue state opportunities are visible to many, but most cannot get in fast enough.
In Blue States, Government Is Not Just a Regulator, It Is a Buyer
Most people look at blue state government and see only regulation, missing that government is also a buyer.
Beyond public agencies themselves, blue states host a large ecosystem of government-funded nonprofits that acquire, build, and operate affordable housing. These organizations continuously need apartment projects that can be delivered quickly at the right scale.
A developer like us, delivering 100 to 200 units at a time, matches that need precisely. Our projects are not so large that they run into the hundreds of millions, and not so small that they fail to address real housing need.
More importantly, government agencies and these nonprofits are willing to sign purchase agreements early in the project, locking in a future acquisition price. Red state developers wait until the building is finished and leased before looking for a buyer. Blue state developers can secure a letter of intent from a government buyer during entitlement, locking in a floor on profit.
Some of these nonprofits also provide very low-cost debt. The Ballmer Housing Fund in the Seattle area, established by former Microsoft CEO Steve Ballmer, offers qualifying developers construction loans at 2%.
Conclusion: What Is Valuable Is Not Freedom, It Is the Barrier
If you are an individual landlord, red states really are better for you. But once you become a multifamily investor, what you should care about is rent and competition. Blue states' big-government approach and administrative inefficiency produce less competition and higher rents, which makes them a paradise for multifamily, and especially for newly built multifamily.
I choose blue states not because they are easier, but precisely because they are harder.
Red state freedom creates supply quickly and destroys profit just as quickly. Blue state regulation raises the difficulty of development but protects the scarcity of assets already built. Our advantage is crossing that barrier faster and delivering product to market before the supply vacuum closes.
What is truly valuable in real estate development is not freedom, it is the barrier. What determines profit is not today's market, but the competitive landscape on the day you deliver.
