Once we are able to build that up in that 97% range, we are able to continue that into January. 97% too again is probably a high mark for us. We are actively bringing that down today. I think February is probably closer to 97% and we are comfortable in the high-96% of 97% range, while testing our rents. And so probably the thing I would point to the most and probably most excited about is that trajectory. So, looking at that rate of change from December of down, call it, negative 1.2, negative 1.3 to 0.2 in January, it’s a positive trend. And the fact that a lot of that is coming from new lease growth, it gives us a lot of confidence as we move forward, but very low lease expirations in January, February. So, give us a little bit more time to see how this plays out over time.
Joe Fisher: Yes. And Adam, just to kind of close out there on the kind of midyear spike, if you will. What we are showing here on Page 9 is based off third-party forecast. And I think we all kind of know and accept that there is always going to be some degree of slippage, and so even with that spike, you are only running maybe 7,500 units a quarter above where we have been kind of in the back half of last year in terms of this year. So, it’s not a big number. There will probably be some slippage, but you are having that slippage and that higher delivery schedule into a typically seasonally a better period of time, which we would expect. And when you have got roughly 8 million units in our collective markets and you are only talking about maybe another 7,500 units a quarter, yes, it really isn’t a big number.
We are cognizant of the risk it creates, obviously. So, given that risk and some others, I think it’s appropriate for us to be balanced in our approach and try to be cognizant of that and not get too far ahead of ourselves in terms of what we think could come on pricing power and guidance.
Adam Kramer: Great. That’s very helpful guys. Thank you. Just maybe a quick follow-up, wondering what the bad debt reserve that you have embedded in guidance says. And I know you have accounted for this a little bit differently maybe than some of the peers. So, maybe just what the bad debt reserve and guidance and then kind of the assumptions around, I guess where bad debt is today? And then kind of what the assumption is for where it is, I guess at year-end?
Joe Fisher: Yes. So, after kind of a challenging first part of ‘23 when we had the excessive level of long-term delinquents, the last six months of last year really leveled out. So, we are pretty consistently getting to, call it, 98.5% collected during that period of time. And that’s really our base case assumption as we go into 2024. And so those higher turns that we saw in the first quarter last year those help out in terms of thinking about stress on occupancy, on expenses, on potentially rates. But because we had reserved those individuals at an appropriate level, there is really no year-over-year implications for bad debt. And so we have taken an assumption that we basically stay at the same level. That said, I think Mike started to go into some of those actions that we are taking.
And so we haven’t really assumed those actions benefit us in terms of who comes in the front door and the possibility of fraud and delinquency. Subsequent to that, be it through kind of those AI-based income and ID verification efforts, we are reevaluating a lot of our deposit and credit thresholds, taking a look at some of our processes related to move-in monies and other aspects to ensure that we continue to try to limit the front door because it really has become a cottage industry in terms of creating fraud and try to get in and take advantage of landlords at this point in time. But for now, flat year-over-year assumption, we hope there is some upside over time.
Adam Kramer: Great. Thanks guys.
Operator: Thank you. Our next question comes from the line of John Pawlowski with Green Street. Please proceed with your question.
John Pawlowski: Thank you for having me in. Joe or Mike, on the – with respect to the low-5% expense growth guidance, if you double clicked on it, roughly, what would the average Sunbelt market look like in terms of 2024 expense growth expectations?
Mike Lacy: John, they are all pretty close, probably within 100 basis points of each other. We are experiencing a little bit more pressure just on personnel in a place like that, just given the supply. Aside from that, we do have more of our rollouts on the WiFi today. So, we are incurring that expense. But we are seeing the offset again in other income because that’s double of what we are seeing in the portfolio as a whole. So, slightly elevated in the Sunbelt, but not materially different.
John Pawlowski: Okay. And then just a follow-up to that point, Mike, did I interpret your comments, the Sunbelt has doubled the lift of ancillary income, so call it, 90 bps. And so the range of 1% to negative 2% revenue growth in terms of – we are just looking for organic market level revenues really closer to zero to negative 3% in your Sunbelt market. Am I interpreting that math correctly?
Mike Lacy: Yes. I will give you a little bit more color on our expectations at the midpoint for the Sunbelt. We are coming into the year with, call it, negative 20 bps on our earn-in and that would imply about negative 2% expectations on full year blends, but the contribution from that will be closer to about 100 basis points negative.
John Pawlowski: Okay. Thanks for the time.
Operator: Thank you. Our next question comes from Rich Anderson with Wedbush Securities. Please proceed with your question.
Joe Fisher: Hey Rich. You might be on mute.
Rich Anderson: Sorry. Thanks Joe. Here, I am. So, I find it interesting that the blended number – excuse me, the renewal number is still 3% or 4% or whatever it is and people are sort of confident that they – even though they know they can get two months or three months free across the street, they are sticking around, to avoid the inconvenience of moving. And that tells me something about what the swing factor is for your guidance going forward. It really is you got this blob of supply cholesterol on the system that perhaps will go away over the time. But if we get an economy in the future that avoids any kind of material drop-off. Isn’t this guidance really sort of realistic in today’s present tense view, but also designed to be beaten if we get an economic picture into the middle part of this year that is resilient – continues to be resilient and so on.
So, is that the swing factor here to the upside, pure economic activity and the demand side of the equation?
Tom Toomey: Hey Rich, this is Toomey. I think you nailed ahead – nailed it perfectly. It’s jobs, okay. We have seen a robust set of numbers and the revisions have been up. We are surprised at the strength of the job market, the people reentering the wage growth side of the equation. And if that were to continue, the absorption of what the supply picture is goes pretty darn smoothly. So, I mean our business starts with jobs. Supply is a chop [ph], if you will, a bump in the road, and we will get past it. But that’s the upside scenario. And I am not sure anybody has hit the jobs number right in a long time. So, we will see how that plays out. But we are encouraged by where it started off in January and February, as Mike pointed to, and hope that, that trend continues, and that would be material revisions to our results. But right now, we are playing it on a consensus as Joe outlined right down the middle.
Joe Fisher: I think too Rich, the only thing to add, Rich, just on your comment there on renewals and why are individuals jump in for those concessions. Keep in mind that those concessions are not a market-wide concession. Those are concessions that you are seeing some developers offer in very distressed sub-markets, so maybe two months to three months in certain locations. But when you only have, call it, 2.5% of stock delivering across our market, that implies a lot of units that aren’t offering those distressed levels of concessions. So, it’s not as if every resident has the opportunity to jump ship, avoid that 3% renewal and go get three months. So, it creates a little bit of a stickiness, not just the fact that they don’t want to move and it’s costly to move, but also there is just not that abundance to jump to.
And we are starting to see that a little bit. Nobody has asked it yet. But last quarter, we talked a lot about the A versus B continue in terms of in the Sunbelt, some of our B renters jump into As for the concessions. We are starting to see a shift in that dynamic after the last couple of months of seeing concessions start to ratchet down a little bit. We are seeing that continuum start to shift back to a more normalized approach to the B renter and staying in the B location.
Rich Anderson: Okay, cool. And then real quick. What do you make of Camden’s market share comment about new households increasingly going the rental route? Obviously, it’s much more expensive to own a home in this market. Are you seeing that play out at all in your neck of the woods?
