Kevin O'Shea
Thanks, Ben. On slide 10, we provide our operating financial outlook for 2025. For the year, using the midpoint of guidance, we expect 3.5% growth in core FFO per share, driven by our same-store portfolio and by stabilizing development partially offset by the impact of funding costs associated with capital markets and transaction activity. At our same-store residential portfolio, we expect revenue growth of 3%, operating expense growth of 4.1% and NOI growth of 2.4% for the year.
For development, we expect new development starts of about $1.6 billion this year and we expect to generate $30 million in residential NOI from development communities currently under construction and undergoing lease-up during 2025. As for our capital plan, our outlook calls for $2.1 billion of capital uses consisting of $1.3 billion of investment spend and $835 million for debt maturities and amortization. In terms of sources, we anticipate raising new capital of $960 million in 2025, which we currently assume be sourced from the unsecured debt issuance later this year.
Additionally, we expect to sell our outstanding forward equity contracts to source an incremental $890 million in 2025, which brings total capital to be sourced to $1.85 billion this year. We also expect to generate about $450 million in free cash flow after dividends in 2025. And as a result of this capital plan, we project unrestricted cash at year-end 2025 of about $275 million.
On slide 11, we illustrate the components of our expected 3.5% growth in core FFO per share to project $11.39 per share in 2025 from $11.01 per share in 2024. We expect $0.31 per share of earnings growth to come from NOI growth in our same-store and redevelopment portfolios. -- and we expect another $0.33 per share of earnings growth to come from NOI from new investment, primarily from development.
Partially offsetting these sources of growth is an increase of $0.29 per share from capital markets activity. Within this bucket, we have called out on the slide the components of capital markets costs, including lower interest income of $0.13 per share as our projected cash positions will be lower on a year-over-year basis in 2025. And an $0.08 impact from higher share count as we sell our equity forward contracts over the course of this year in connection with match funding development starts.
These two items combined for $0.21 of the $0.29 from costs from capital markets activities. As for the remaining $0.08 of costs from capital markets activity, these consist of modest headwinds from refinancing existing debt and net disposition activities, partially offset by modestly higher capitalized interest and earnings growth from (inaudible) activity.
So with that summary of our outlook, I'll turn it over to Sean to discuss our operating business.
Sean Breslin
All right. Thanks, Kevin. Moving to slide 12 and the outlook for apartment demand in 2025. Third-party forecasts reflect a moderating, but healthy environment for job and wage growth, with wage growth specifically in the high 3% range, which should support relatively stable effective rent growth throughout the year. For our portfolio, specifically, we're also likely to benefit from the expected increase in job growth in two important sectors, professional services and information, which overindex to our established regions and produce above average wages. Growth in these sectors was relatively weak in 2024, but is expected to rebound nicely in 2025.
Turning to slide 13. Demand for apartments in our established regions will continue to be supported by two other important factors: first, somewhat stable rent-to-income ratios which remained below pre-Covid levels given healthy income growth the last few years and indicate rental affordability in our coastal markets shouldn't be a material issue.
And second, the relatively unaffordable nature for sale housing in our established regions. Currently, renters looking to trade into the median-priced home in our established regions, but experienced a cost increase of more than 2,000 per month relative to the median price department, and that excludes the ever-rising cost of ensuring that home, which has risen materially over the last few years.
Pivoting to slide 14 and the outlook for supply, our established regions are expected to see the lowest level of supply as compared to both US overall and the Sunbelt with new deliveries representing just 1.4% of stock. And when you look at our suburban submarkets, we're roughly 3/4 of our same-store portfolio is located. The story is even better as suburban deliveries are only forecast to be 1.2% of stock in 2025.
Additionally, as we look beyond the current year, it's important to remember that it can often take years to get a new development entitled in our suburban coastal markets. So we may experience low levels of new supply in these regions for an extended period of time.
Moving to slide 15 and our outlook for 2025 revenue growth. There are three primary drivers of our expected 3% increase in same-store total rental revenue growth. First, higher lease rates, which reflects our embedded growth from last year and our forecast for like-term effective rent change of 3% for the calendar year 2025.
Second, strong growth in other rental revenue, which is estimated at almost 9% in 2025 as we continue to deploy various operating initiatives; and third, improvement in uncollectible lease revenue from residents which is forecast to decline by approximately 40 basis points from 1.8% in 2024 to 1.4% in 2025.
Turning to slide 16. Our established coastal regions are expected to produce rental revenue growth north of 3%, while the expansion regions are projected to deliver sub-2% growth its heavy levels of unleased inventory from 2024 and new deliveries in 2025, continue to weigh on near-term performance.
In our established regions, the Mid-Atlantic is projected to lead with mid-4% revenue growth followed by Seattle in the low 3s, Northern and Southern California at roughly 3%; and then New York, New Jersey and Boston in the mid-2% range.
Moving to the outlook for operating expense growth on slide 17. We expect same-store operating expense growth of 4.1%, consisting of an organic growth rate of 3% and the net impact of profitable operating initiatives, adding 50 basis points and the phase out of property tax abatement programs, most notably in New York City, adding another 60 basis points during 2025.
Additionally, we expect operating expense growth to be higher in the first half of the year as compared to the second half for several reasons, including year-over-year comp issues related to our Avalon Connect deployment, renewal for insurance in 2024 and merit adjustments for our associates, which will occur in the first half. Now I'll turn it to Matt to address our investment activity for 2025.
Matthew Birenbaum
All right. Thanks, Sean. Turning to slide 18. We are looking forward to an active year across our various external investment platforms this year, supported by the funding already in place from last year as indicated in Kevin's remarks. We expect to continue to ramp up our sector-leading development platform with $1.6 billion in new starts planned at yields in the low to mid-6s. We also look to continue to be active in the transaction market with portfolio trading activity as we pursue our long-term portfolio allocation goals, selling assets out of our established coastal regions and redeploying that capital into acquisitions primarily in our expansion regions.
Given the decline in operating fundamentals and associated asset values, in many of our expansion regions over the past two years, we do view this as a more attractive relative trade in the current environment, and we'll look to increase our portfolio trading where we can. In our structured investment program, or SIP, which is our (inaudible) lending platform to provide high-yield capital to merchant builders in our markets, we have continued to be highly selective and did not originate any new loans last year. However, we do several attractive opportunities in the current pipeline and expect to be able to grow this book of business from its current $190 million balance by another $75 million in 2025 as we advance towards our program goal size of $400 million in total. And we continue to grow value-add investment in our portfolio with highly accretive opportunities to add more resident solar, kitchen and bath renovations and accessory dwelling units in California.
Slide 19 provides a bit more color on our development starts for the year. All are located in suburban submarkets and our less expensive wood frame construction with the volume concentrated in our expansion regions and in California. It has been exceedingly difficult to get the math to work for new starts on the West Coast for the past several years as reflected in the extremely low levels of supply in those markets. This should provide strong support for future performance for the over $500 million in new development we plan for Northern and Southern California in 2025. And with that, I'll turn it over to Ben to wrap things up.
Benjamin Schall
Thanks, Matt. To recap on slide 20. 2024 was a very successful year for AvalonBay with the organization delivering strong financial and operating results. Going forward, we continue to execute against our strategic focus areas with a laser focus on delivering superior growth. Apartment fundamentals in 2025 continue to look favorable in our established regions. We have a rich menu of investment opportunities and have a balance sheet well positioned to pursue accretive opportunities.
And with that, I'll turn the call to the operator to facilitate questions.
Operator
(Operator Instructions) Eric Wolfe, Citibank.
Eric Wolfe
How should we think about the development accretion you're going to see in earnings this year versus last year? Obviously, you have the capitalized costs moving higher, but not sure if there's an offset in terms of total increasing capital cost. So I was just trying to understand how you're thinking about the potential for earnings accretion this year versus last.
Kevin O'Shea
Yes, Eric, this is Kevin. There's obviously a number of puts and takes that go into that calculation. We do have slightly higher capitalized interest this year about $0.06. On the other hand, we do have lower occupancies this year versus last. We have occupancy this year in our outlook about 3,000 units. Last year, it was about 2,200 units, so a little less of that. So -- and some of that occupancy fall off a little bit in the front half of this year. So -- and there are other things going on as well. We've got, as you could see, lower cash levels, so lower interest income. And then also, we have the equity forward issuance this year, which will increase our share count relative to '24.
And our expectation in regard to the equity forward is probably that's -- we're likely going to be pulling down those shares in the back half of the year. When you roll it all together, roughly, we anticipate about $0.15 of growth from our investment platforms, primarily from development, which is really kind of a few areas, the NOI from investment, $0.33 SIP net earnings growth, maybe around $0.03, higher cap interest about $0.06 and then partially offset by the lower interest income to $0.13. The share issuance under (inaudible) and probably another $0.06 attributable to the net dispositions that we use from the development activity. So that's how you get to the $0.15, give or take. And that's about 120 basis points of growth all in -- so that's one way to sort of look at that's how we take a look at that issue.
Eric Wolfe
And you've talked about continuing to deploy capital in the BPR product, like given the larger units and in suburban locations. I guess are there any additional challenges to developing or operating those communities that you've seen thus far versus more traditional multifamily -- to the extent that there's some portfolios that are being marketed products that the kin to what you would develop, would you be willing to take a look at those?
Matthew Birenbaum
Yes, Eric, it's Matt. To the extent that there are portfolios that are aligned with our strategic priorities, we would absolutely take a look at them. I will tell you, as it relates to BTR, a lot of what's been built to date has been in tertiary markets or in pretty far flung kind of third ring suburbs of our major markets. So not a lot has been out there. We did buy one asset last quarter in Austin, they kind of checked all those boxes. It was 100% three- and four-bedroom townhomes. And we -- so we expect -- we will probably grow more of that product through either DFP where we're funding kind of middle-market builder developers of the product or building more of it ourselves.
We have a number of communities we expect to start this year that are garden to have townhome components to them as well. We started one of those last year as well in Austin. So that's more likely to be the case, but we're certainly open to it. And on the operating side, we don't really have enough history of operating 100% VTR communities to speak to it yet. Again, we do have several thousand townhomes in mixed communities within our own portfolio, and I'm not sure the profile of those has been materially different. I don't know, Sean, if you (inaudible).
Sean Breslin
Yes. The only thing I would add, really, Eric, is if you think about the way people operate BTR, particularly for these smaller communities, there are 100 to 150 units. It's typically not dedicated to there's a maintenance team, there's a sales team. They rove around from community to community. It's more where the multifamily industry and for us specifically have been moving over the last two or three years is to have a more mobile-enabled flexible workforce. So I think it's pretty well aligned to the extent that the assets, to Matt's point, or with any reasonable proximity of sort of core multifamily assets, it makes it relatively easy for us to operate those.
Operator
James Feldman, Wells Fargo.
James Feldman
Can you provide more color on your thoughts on new renewal -- new renewal leases and what the trajectory looks like throughout the year. If you look at slide 12 of the presentation, it shows a meaningful tick up sequentially in the job outlook, employment outlook. So I'm just wondering -- are you assuming a similar acceleration into 4Q on blends as you did in last year?
Sean Breslin
Yes. Jim, this is Sean. I'm happy to take that one. So yes, as I mentioned in my prepared remarks, we're expecting like-term effective rent change to average 3% for the year. To your point, we are expecting slightly stronger growth in the second half of the year as compared to the first half of the year, which is actually the opposite of what occurred in 2024. Combination of different factors influencing that in terms of year-over-year comp issues, more declines in supply expected in the second half of the year as opposed to the first half of the year and various other things. So slightly better growth in the second half of the year is the way to be thinking about it today.
James Feldman
Okay. But -- so can you provide more granularity on what you're thinking on new leases versus renewal and then specifically in 4Q this tends to be the seasonal slowdown. Is that -- are you still expecting a pick like -- I know in 4Q, you expected inflection higher didn't play out. Are you thinking something similar this year?
Sean Breslin
Yes. So for the full year, the expectation is that renewals will average probably in the mid-4s and new move-ins will average kind of mid-1% range. And then as it relates to the first quarter, consistent with sort of historical norms, we would expect sequential improvement as we move through the first quarter into the prime leasing season. So as it relates to Q4, we did have slightly softer rates on both new move-ins and renewals given slightly lower occupancy. But net-net, it wasn't terribly material, given the volume of leases is pretty light during those two months.
James Feldman
Okay. And then I guess just sticking with the 4Q result. I mean were there any markets that surprised you? I'm looking at what you provided in the earnings release, I think just Denver seemed like it really rolled over November, December, nothing else seemed to really stand out. So can you provide just more color on what played out differently than you expected or if there's any markets that caught you off guard?
Sean Breslin
Yes. So as you pointed out, I mean, Denver was the only one that's maybe a little bit of a surprise. I mean I think if you think of the fourth quarter, one thing to keep in mind here is, on a net basis, it was not terribly material. We're talking about the Q4 shortfall was about $700,000 on $670 million of revenue. And for the full year, total rent revenue growth was like 3.42%. So it was up 3 or 4 basis points from what we originally anticipated. So -- the primary driver being, as I mentioned, slightly higher -- excuse me, vacancy than we anticipated, which did impact the move-in of renewal rates across most of the markets as we move through November and December. So net-net, not a material number, but at the margin, when you have a small sample size of leases, it can move the rent change calculation.
James Feldman
Okay. So it sounds like your outlook in each of the market hasn't really changed.
Sean Breslin
No. No, I'd say -- like I said, it was a little bit of a rounding error in Q4, but the fundamental outlook for 2025 is intact.
Operator
Austin Wurschmidt, KeyBanc Capital Markets.
Austin Wurschmidt
Just curious if you guys at maybe if you've seen any pickup in the transaction market and just how that's kind of playing into your ability to use the disposition capital to rotate into the expansion markets and whether you still expect to be net neutral on the buy-sell side this year?
Matthew Birenbaum
Yes, Austin. So the transaction market has been pretty volatile, I would say. We did see a pretty significant pickup in Q4, fourth quarter multifamily closings were up quite a bit over fourth quarter of '23 and over the third quarter. But almost all of that business was deals that priced before when the (inaudible) was closer to 4% than 4.5%. And so what we see is any time that the 10-year starts to get down towards that level, transaction volume starts to pick up because there is a lot of capital that's still on the sidelines. But when you see rates move back up to where they are today, the volume comes back down again because cap rates for most of these assets are trading still below the debt rates -- and there's just limited buyers that will fit that profile.
So we saw a number of larger deals closed in Q4. I would expect Q1 to be much quieter. We just had the big NMHC conference if you ask people 90 days ago, they would have said there's going to be all these listings come out and they then all geared up. Now they came out and they all said, yeah, maybe second half. There needs to be some more stability in debt rates for the market to pick back up.
For us, we actually last year wound up being a net seller of a couple of hundred million. That was not our expectation. We thought at midyear that we were going to be net neutral. So we didn't we did get more sold than we expected relative to what we bought. So we start the year and we have a couple of dispos currently working in the market that we expect to close here in Q1. So we start the year with a little bit of a head start on our trading activity. So we do think that we have some spending money, so to speak. And we are looking to be more active understanding though that the limit is -- is there enough for sale that we would want to buy. And that has yet to be seen because we are selective in terms of what fits our box.
Austin Wurschmidt
So I guess, I mean, is the approach to continue to kind of have assets teed up to give you that buying power to the extent that the market does free up and you see opportunities arise. And I guess, I mean, how do you kind of take advantage of where the balance sheet is today with the forward equity available to fund development, stock price is at a level you guys have been willing to issue some equity. And clearly, there's fundamental improvement ahead over the next few years within those expansion markets. So just curious how you're thinking about all the different sources and uses and whether you'd be willing to look at other sources of capital if the disposition markets remains volatile.
Matthew Birenbaum
Yes. I'll speak to that a little bit and Kevin may want to chime in as well. But yes, so the first thing is we are not counting on the disposition market to fund our development. We're looking to grow development significantly this year, and that is being funded primarily through the equity forward that was sourced last year and through free cash flow. So again, we're starting from a good place where we're a little ahead on our dispose relative to our acquisitions. And yes, to the extent that we see more -- we continue to see buying opportunities. We're hoping we can increase our asset trading to roughly $1 billion on both sides, both buying and selling this year. And to the extent we see the buying opportunities we like.
And you're right, the basis is getting pretty interesting. We can certainly use some of the dispos we've already prefunded so to speak. We will pull more disco assets off the bench and then we can also consider other sources of capital to the extent the yields that were appealing.
Kevin O'Shea
Yes, Austin, this is Kevin. Maybe just to add a couple of things. I think you're looking at it the right way in Matt's comments (inaudible) into that. I mean we are in a strong position from a financial point of view, we've got a lot of capacity to lean into opportunities should they make sense to do so. Naturally, we need to look at sort of the incremental return relative to our funding costs. And given where debt rates are, that does narrow the opportunity set somewhat. But I think what that really speaks to is not only our capacity to be flexible, but having a mindset of being nimble and responding to opportunities not only in the investment market, but also the capital markets to try to create that spread so that what we can deliver is a cost-effective capital to the investment uses that kind of move us down the field towards our strategic objectives in terms of portfolio positioning and funding development.
Benjamin Schall
And also, I'll add a third area of emphasis, which is increasingly, as we think about opportunities, we also want to bring our strategic capabilities to bear and particularly the operating model initiatives. We're now in our underwriting on specific new acquisitions and new developments to the tune of 30 to 40 basis points of incremental yield by having those assets on our platform. And I also emphasize that we're now at a point in most of our expansion markets where we've got our teams in place, we've got the density of assets starting to build up, where I really do feel like we're at the point where we can leverage those investments we've been making over the last four or five years to step into further growth.
Operator
Jeff Spector, Bank of America.
Jeff Spector
Great. Just a big picture, Ben, on recent demographic shifts, changes that we're seeing. Anything impacting your decision on the future allocation of (inaudible) 80% confident to stick with that at this point? Is there any thought to decrease that?
Benjamin Schall
Yes. I appreciate that, Jeff. And we go through a fairly robust updated strategic assessment each year looking to try and identify are those that are the shifts that have happened that as we think forward a couple of years, we want to start to get ahead of. So that's a constant process, constant part of how we think about evolving our platform A lot of the demographics is obviously longer-term trends, demographics, migration shifts, regulatory environment. So we are still, at this point, focused on moving increasingly to the suburbs with a target of getting suburban exposure. We made good progress this year.
And then the other big shift is our expansion market shift to get to 25%. And then the other elements which you're increasingly hearing us to talk about is the evolution of products, right? It's not just market and submarket, but it's also the right product at the right price point. And I think we have taken a different approach in terms of how we've built out our portfolio over time, but particularly recently in the expansion markets with a heavier suburban focus, a focus on lower density, slightly older products that we believe will be less susceptible to new supply and deliver stronger growth over a cycle.
Jeff Spector
Okay. And then my second question, probably a tough one to answer given the changes we're seeing on tariffs. But development costs and the risk of tariffs, and we've seen homebuilders come out with projections of higher costs. Of course, I'm assuming that would really more hit garden style. But how should we think about the risk of tariffs and the development costs, I think they're fairly set in '25, but '26, how are you thinking about it?
Benjamin Schall
Yes. I'll start at a high level and ask Matt to talk a little bit more specifically challenging at this point in time to forecast what ologiepolicy changes are going to come through equally challenging to figure out what the flow-through of that is going to be from the economy down to the apartment market, tariffs being one of those areas where we can. We are trying to get ahead of those potential impacts. So thinking about securing supply channels, thinking about locking and pricing there's aspects of it that could flow through to some contract services. And on the development and construction side, not huge swings, but potentially some headwinds there. Matt, do you want to provide some more details?
Matthew Birenbaum
Yes. We do look at it all the time. And Jeff, I'd tell you is when you think about what goes into the cost of a new apartment community, land is on average, maybe 15% of the total budget, 10% to 20%, maybe even 25% depending on the location, but on average, call it 15. Soft costs, interest, A&E, permits and fees, overhead is probably 30% to 35%. So you had -- your actual hard cost is probably about 60% to 65% of the total capital cost. And of that cost, most of it, probably 2/3 of it is labor depending on the trade.
So we have gone through, and if you look at it on a typical deal for us based on assumptions you make about what percentage of product is foreign sourced and so on. It might add a couple of percent to a total budget, maybe $5,000 to $7,000 a unit, if it all gets 100% passed through. So that would be a little bit of a headwind to future new business. I think much more important is labor. What makes up hard costs it's the materials, that's the smallest piece of it, it's the labor and then it's the subcontractors profit margin. And what we're seeing in the current market today with the slowdown in multifamily starts and with the slowdown in single-family store, is the subcontractors are hungry for work.
So we're seeing great success on the buyout right now on the things that we currently have in the market. And you can see that even in our current -- the deals we just completed this past quarter actually finished under budget, which is the first time I think I've been able to say that in probably six years. And the deals we have currently under construction are also tracking a little bit under budget. So much more of it's going to depend on the macro environment, the subcontractor, the trade base, how busy they are and ultimately their labor costs. But -- so right now, there's more tailwinds than headwinds, but obviously, that could change.
Jeff Spector
And then just one more, if I can. On the prior call, the company was a bit cautious on Boston. Can you talk about Boston, your thoughts between supply and demand? And then is pharma, biotech slowing down Boston more than expected?
Sean Breslin
Yes, Jeff, this is Sean. I would say our experience in Boston is relatively positive. We do not have a cautious outlook for Boston whatsoever. It's been a strong performer, particularly our primarily suburban portfolio, well insulated from new supply, highly educated, high-income workforce there in Boston. If we don't have a lot in the sort of inner core, we have a handful of assets where there's been a little more supply, so it may just be portfolio differences that are creating a bit of a cautious notice as compared to our experience.
Operator
Nick Yulico, Scotiabank.
Nick Yulico
I was hoping to get what the development completion expectation is for this year relative to the $1.3 billion that was completed last year?
Matthew Birenbaum
Yes. Nick, it's Matt. I think we're only looking at completing about $350 million this year, $350 million. Yes. So that's why you're going to see -- our expectations if we started (inaudible), we only complete $350 million the development underway would grow from, call it, $2.2 billion today to $3.5 billion by the end of the year.
Nick Yulico
Okay. Yes. That's helpful. And I guess the follow-up on that is I know page 11 of the presentation, you guys gave that helpful math on the NOI from new investment and then the capital markets activity, and there's not the net of those two is a slight benefit this year. So I guess, based on what you just said, that $0.33 from new investment, that's a sort of lighter number I guess, than normal and perhaps the capital markets activity is eating into that more so than it would in a in a given year, meaning that like -- this feels like this might be a little bit of an abnormal year for how development overall is contributing to earnings growth. Is that the right way to look at it?
Kevin O'Shea
Nick, probably that's probably true to some degree. The capital costs are a little heavier this year. You do have a cap interest benefit of $0.06 that goes the other way. And then per your discussion with Matt, where we're delivering a little bit less. Our occupancies this year, which is what gives us this development NOI is expected to be -- is expected to be a little less this year at 2,200 units this year versus 3,000 units in '25. So when you kind of roll it all together, you can see this in our development NOI itself, which is a component of that $0.33.
For 2025, our development NOI is expected to be $30 million. Whereas for last year, it was a higher number last year at about, I think, probably $40 million or something like that, $4 million mom million. So -- when you put it all together, there's a little bit less development NOI coming through, but there's some puts and takes. And I guess I'd refer you to kind of the answer that I gave to Eric at the top of the call here in the Q&A session, where I kind of walk through the development accretion with our SIP earnings growth. What we think we get from our investment platforms in terms of earnings growth this year is about $0.15, which equates to about 140 basis points of growth. That's probably a little lower than a normal year, which is probably more like 150 to 200 basis points of contribution from our investment activities. And again, if you want to walk through this offline, we can certainly do that.
Operator
John Pawlowski, Green Street Advisors.
John Pawlowski
Matt, just two transaction market questions for you. I'm curious in the markets that you're looking to buy in what rough range of discounts to replacement costs are you able to buy out? Because I know a lot of folks in the private market are quoting discounts to replacement costs, but it's a really, really subjective figure and that you can pick any number to justify price you're paying. So curious what your team is seeing given your good detail or good kind of clarity on construction costs and where you can buy in the same market?
Matthew Birenbaum
Yes. It is something that we also look at pretty closely because those are both investment options that are available to us, and we're both developing and buying in many of these markets today. So it depends on the submarket. It depends on the product type. A lot of what we're looking to buy is, call it, 5 to 10 years old, and it might be at a 10% to 20% discount replacement cost. And that's not appropriate -- brand new product should sell at a higher price per door per foot than 10-year-old 5- to 10-year-old product, and it will generate more NOI.
There are markets where you can probably buy brand-new product in lease-up are coming right out of lease-up below where today's replacement costs are. Those are not the markets and the submarkets we're generally looking at. We're trying to stay away from those high-supply submarkets. So what we've been looking at anyway, it kind of lines up in a way that makes a bit more sense.
John Pawlowski
Okay and then last one for me. I briefly caught your portfolio trading commentary, the quote you had. Could you just expand on that? It sounds like you're more optimistic organic portfolio. Is that a function of wanting to accelerate your portfolio shift in the suburbs in the expansion markets? Or is it a function of you're seeing better pricing on portfolio acquisitions?
Matthew Birenbaum
Yes. No, I -- but what I meant to say anyway, was if a portfolio that aligned with our strategic objectives came to market, we would definitely be interested in pursuing it (inaudible) balance sheet would support it. So we certainly could pull the trigger on something it was attractive. We're not necessarily at this moment seeing that. So I'd say the conditions. Our balance sheet supports the conditions are there. And more broadly, we think it's a better time to make the relative trade than maybe it has been in the last couple of years. So therefore, our hope is that we will be able to increase our portfolio trading activity further, but we haven't seen anything yet.
Operator
Adam Kramer, Morgan Stanley.
Adam Kramer
Great. Wanted to ask about the Los Angeles market, obviously, a really unfortunate wildfires and situation there. I was wondering if, in your portfolio you've seen anything on the ground, whether it's leads or activity that could suggest there could be some incremental benefit to the portfolio just from a need for more rental properties. And then on the other side of it, anything from a headwinds perspective, be it the picture moratorium or anything else that could impact operations on the other side?
Sean Breslin
Yes, Adam, this is Sean. First, as it relates to your initial question, if you think about the displacement and what happened there was certainly (inaudible) -- as you might imagine, what we have heard on the ground from our teams is that most of those customers, as you might expect, are looking for single-family rentals, larger floor plans, preferably in the same school districts if they can get it, which is certainly challenging, obviously, given the level of destruction that occurred. We've seen a little bit of an uptick. I would say over the last weeks, maybe 15% of our leases is around 60 leases or so have come from people who have been displaced. But it is very specific as assets and submarkets.
Pasadena, Glendale, Santa Monica, Burbank, some of those submarkets. It's a handful of leases here and there that add up to about 60 leases. So it's hard to know where it's going to go forward as the insurance process evolves and things of that sort, but that's what we've experienced thus far. And as it relates to to potential adoption of any eviction moratorium and/or rent freezes, we have not contemplated that as part of our guidance. There's been chatter about that. City Council looked at it a week ago. They (inaudible) housing housing committee is reviewing it, saying (inaudible) council. So there's a little bit of pingpong going on right now. So we don't know exactly how that may come out. But we hope that they don't take action that certainly has a negative impact on people who have been displaced. We need more housing for those folks, not less. So we'll see where it comes out, but we don't know anything definitive at this point.
Adam Kramer
Got it. That's helpful. And then looking at that slide 12 with the kind of job growth any kind of employment forecast for this year. I don't know that I have a specific question here other than just, I think, being a little bit surprised maybe kind of the acceleration in jobs for the rest of this year. And I know these are from the third parties. So the the level of granularity that you guys have may not be super robust here. But just to the extent you can talk about kind of what their thinking is or what's embedded in that kind of acceleration over the course of this year from jobs perspective. And again, it looks like it's taking jobs in 3Q and 4Q to a level we haven't seen in a couple of years. So just the kind of underlying assumptions or thought process there, I think, would be helpful.
Benjamin Schall
Yes, Adam, it's Ben. We continue to look at NABE, the National Association of Business Economists as the starting point for our job and wage assumptions going into the year. And as you call out, moderating growth last year, wind up having roughly about 2 million jobs generated across the country and Dave's consensus is that figure coming down into roughly the the $1.5 million type of range, fairly consistent kind of growth throughout the year. Sean called out in his prepared remarks, we are hopeful that we'll benefit from a better mix of jobs this year given potentially more of the growth occurring in the core AvalonBay types of industries.
Sean Breslin
Yes. One thing just to clarify and make sure you're interpreting the chart correctly, is that chart on the right only reflects two job classifications within our Southeast regions. It's not overall job growth. So keep that in mind that is talking about an acceleration in those specific categories of employment as opposed to that being the cadence of overall job growth throughout the US.
Operator
Rich Hightower, Barclays.
Rich Hightower
John, I want to go back to your comments on the breakdown between new and renewal and blends for the year and to see if you could break it down just a little bit further and tell us how sort of the established markets relative to the expansion markets might look under the same framework.
Sean Breslin
Yes. So as I mentioned, we expect to see an improvement and effective rent change as we move through the year, which would be normal with the second half being slightly stronger than the first half, which is the opposite of what occurred in 2024. And -- so that's kind of where we are as it relates to the sequencing by quarter. As it relates to the expansion regions versus the established regions. The first thing I would say is majority of our portfolio is obviously our established regions, and we're expecting rent change to be healthier in those regions as compared to the expansion regions.
The expansion regions, it's -- we're talking about a handful of regions here. So I wouldn't necessarily average them because you have a lot of different things happening across those regions that are very unique Charlotte, particularly urban Charlotte, (inaudible). It's likely going to be flat to negative. Dallas will likely be positive this year because of a pretty rough 2024 in the 2% to 3% range positive. And then Florida in Denver, Florida is expected to be very modestly positive, I call it, roughly flat to plus 50 basis points.
And then as it relates to Denver, feel better about Denver than what is represented by the market overall, given the distributed nature of our assets across suburban submarkets. That being said, it's experienced a level of supply that has impacted the market more generally. So it would also be below the established region average. So I would be hesitant to draw sort of a broad conclusion across expansion regions, but give you those insights as it relates to each one.
Rich Hightower
That's very helpful. And then the second quick one is for Matt. You mentioned wanting over time to grow the SIP book to maybe around $400 million. I think we've heard comments on other calls that, that particular product in the marketplace is becoming increasingly competitive I guess, in terms of capital chasing yield and so forth. So maybe just tell us about the dynamics that you're seeing in the marketplace and how you guys can sort of be Uber selective and still hit your growth targets there?
Matthew Birenbaum
Sure. Rich, I guess what I would say is we do think that we bring -- in terms of the competitive environment, for us, the issue hasn't been losing deals to other providers of that slice of capital. It's been finding deals that underwrite to an appropriate level of safety and margin for us relative to where our proceeds are going to stop. So we're not going as high up the capital stack as we used to go, whereas maybe earlier iterations went just given what's happened to interest rates and valuations. So what we saw last year is there were a lot of deals trying to get capitalized that really They were just the wrong core product market fit. They were high rises in a market that would only support mid-rise or midrise in a market that should only support garden or very aggressive super luxury rents assumed or something like that. So through the course of '24, a lot of those deals got flushed out of the system and just didn't happen. And not only did they not happen, but eventually, the sponsors just gave up and moved on.
So what we've seen recently, I'd say in the last quarter or so is deals that may start to make a lot more sense. They're in a much better basis. It's a better land deal. It's the right product. It's generally not as ambitious and aggressive in terms of the density and the rent level. So we think those deals make sense. And some of those deals, people are not taking -- our program is strictly (inaudible) to merchant builders. We're not doing to kind of bridge to bridge thing or the recaps and the reason we're keeping it to that is because it leverages our unique capabilities in development, construction and operations.
So on the deals that make sense to us I would say we are a preferred capital provider, and we have intercredit agreements with quite a few primary lenders, both banks and debt funds that take a lot of comfort in the fact that we are there with them in the lending in the capital stack because we have a lot of internal data. We know how to look at a deal and understand if it's getting built right and if it's going to be operated, right? So I'd say we're very competitive on the deals that we want to win, and it's just hoping that there'll be enough of them out there. So that's a pretty modest goal. I mean these are $20 million, $25 million per deal. So we're talking three deals, three or four deals over the course of the year. We already have one that's in due diligence right now that we hope to close here in the first quarter and several others that are in the advanced stages. So I'd say it's a relatively modest goal, and I'm feeling pretty good about it.
Operator
Alexander Goldfarb, Piper Sandler.
Alexander Goldfarb
Two questions. First, Fee income has been a popular topic as the industry rolls out various things like WiFi in addition to historic things, waste services, et cetera. As you guys look at the total all-in pricing, of rent plus these other services. Is it your sense that these services are additive or from a resident perspective, they look at the whole sort of the whole (inaudible) and say, this is the amount I can pay, and therefore, whether you're charging more in fees or rent, it doesn't really increase the overall sort of growth rate of the unit per se.
Sean Breslin
Yes, Alex, this is Sean. It's a good question. What I'd say is it depends a little bit on the composition of the various things that end up in the bundle, I'll call it, -- so for example, if we're talking about (inaudible) Internet to you as one example, if we could replace the cost of that service for the resident at a comparable speed at a discount, net-net, you should look at that favorably, right?
When it comes to other fees that are out there, I think it's a good point where people start looking at, okay, there's let's call it, a move-in fee for amenities or there's a recurring maintenance fee or this that or the other. If you're an outlier as it relates to that, then you may start to see some resistance everybody is passing through utilities, (inaudible), things like that, that are relatively standard. I think it's people who maybe add on the edge a little bit as it relates to either the amount they're charging for something or the unique nature of one that people may start to pause and wonder if that really makes sense or not.
So it's an area that's evolving, I would say, we're all pushing at the public to private, et cetera. And I think where we're providing good service and good value for residents. They should appreciate it. It may take a little education for us to understand it. Hey, with this fee, well, this is the bulk Internet fee, if you look at what you pay every month to Verizon, what we're offering at a discount, et cetera, et cetera. It's a good question. I think people are working their way through it. Net-net, we think we provide good value to residents for what we charge, but it is sort of an owner by owner type of approach you really have to look at.
Alexander Goldfarb
Okay. The second question is on harvesting assets, clearly, you guys are now out of Connecticut. As you look at Maryland, Montgomery County has become a flashpoint, given rent control. Is it your view that that's another -- that Maryland is another market that you would look to significantly scale back, especially where it's been impacted by rent control laws. Just sort of curious, given some of the headlines out of that market.
Matthew Birenbaum
Yes, Alex, it's Matt. It is a factor in our overall portfolio allocation goals longer term. So Ben talked about our goal to get to 80% suburban. Some of that is about demand and supply. We like the demographics and there's more supply constraints in many of these suburban towns. And some of it is about regulatory risk and exposure, and most of the jurisdictions that have a more aggressive regulatory regime or more regulatory risks are urban. You mentioned one that's not, Montgomery County, which is suburban. We have a relatively modest presence in Montgomery County. I think we only have maybe four assets there. So we're not necessarily looking to lighten up specifically in Montgomery County at this moment, but it is a part of our overall strategy, and you'll see us continue to sell assets out of jurisdictions where we view there being elevated regulatory risk over the next period of years. I mean, even if you look at what we sold in the past year, we sold asset in the city of Seattle. We sold an asset in the city of Los Angeles, City of Boston. Those are all places -- I mean, that was one factor among others, and you'll continue to see that.
Benjamin Schall
There's the disposition side, Alex, and obviously, then there's also the new investment side. And so in certain locations that have heightened regulatory risk or uncertainty as it relates to the regulatory future. For sure, the bar is higher there in terms of investing new capital dollars.
Operator
Rich Anderson, Wedbush Securities.
Richard Anderson
So when you just look at what you have going on right now, and let's say you get everything done in 2025 that you have on your plate, how much closer do you get to your 25% target in expansion markets from the 10% that ended the year? I'm just wondering what -- how much the gap close over the course of this coming year as you see it today.
Benjamin Schall
Yes. Rich, we've been taking a fairly steady and sort of measured approach there. As you saw this year, we moved it to 2% to 3%. So if we continue in that normal course between trading activity and new investment activity is probably likely in that range. Now that is subject to the extent that we find opportunities, a small portfolio, opportunities to potentially move that needle quicker that's out there. But normal course is probably in that type of range. So it's a multiyear effort, which has benefited us as we've sort of paced our capital allocation into these markets over time.
Richard Anderson
Okay. And maybe correct me if I'm wrong here, but I think 45% of your starts this year will be in your expansion markets. Do you think as that area in the country steadily improves over the course of this year and perhaps you start to see some really big time growth in '26 and '27 that acquiring in those markets becomes incrementally less appealing and developing is perhaps the way you top off getting to your full allocation of 25%. Is that a reasonable way you think about it like for now, maybe more in the way of acquisitions, but later on more in the way of development?
Benjamin Schall
I think about it as both. I mean I wouldn't -- I don't think it's an either/or choice for us at a market level, at a submarket level, obviously, we'll lean into acquisitions versus development going back to Matt's conversations as it relates to replacement cost. But I think we are in a window right now where we feel like we have a balance sheet. We can bring our strategic capabilities to bear where we can be growing both through acquisitions and development and then breaking down development further through our own development and through the funding of other developers and that's a program that in times where we feel like we have the green light on development in terms of economics of development and cost of capital that allows us to flex capital allocation into that sleeve.
Operator
Michael Goldsmith, UBS.
Michael Goldsmith
Can you talk about the gap in performance in suburban and urban markets in the fourth quarter? And do you expect that gap to remain similar in 2025?
Sean Breslin
You say GAAP and performance, Michael, can you be a little more specific as to what you're looking for? Are you talking about like rent change as an example?
Michael Goldsmith
Yes. Yes, rent. Rent change exactly?
Sean Breslin
Yes. Yes. From a rent change standpoint, our suburban portfolio continues to outperform, we outperformed in the fourth quarter by about 40 basis points. And given some of the dynamics we've been talking about and what I refer to as it relates to the very, very low levels of supply in our suburban submarkets. That expectation is that it will continue moving forward. There are some places with return to office that you might see a little bit of a lift more significantly on the urban side. We haven't seen that quite yet, but it's certainly a possibility as we move through the year.
Michael Goldsmith
That's helpful. And my second question is a bad debt assumption for '25 imply that delinquencies remain elevated versus historical level? -- what factors are you keeping you from reaching that historical level of bad debt?
Sean Breslin
Yes, Michael, Sean again. Yes, in terms of reaching the historical level of bad debt, I think the couple of schools of thought there. I mean people wonder is that achievable or not, the 50 to 70 basis points that we have realized historically, that is still a little bit of a TBD. The headwinds are certainly a tighter regulatory environment in terms of the processing of evictions. The time line is taking some of that's just backlog and some of it is additional regulatory actions that have been adopted that slow the process. So that may be a little bit of a headwind to getting back to normal levels.
At the same time though, there's always been an element of fraud in the system. And I would say that the industry has much better tools available nowadays than we ever had pre-COVID to weed that element out, screen them out essentially. So there's some puts and takes there. So we still have ways to go in terms of getting there. I suspect my intuition is we will certainly be closer to the 50 to 70 and where we expect in 2025, but it's going to continue to take time to get there in certain markets, in particular, like in New York City, the District of Columbia, Monterey County, but you see a greater movement in those regions to support us getting there a little bit faster.
Operator
Alex Kim, Zelman & Associates.
Alex Kim
Just to clarifying one to begin. Is the development volume from the DFP included in the overall $1.6 billion number? And is there a number of -- or percentage book the (inaudible) homes, you developing alongside your apartments?
Matthew Birenbaum
Yes. Alex, it's Matt. So yes, the development volume includes -- it's mostly our own development and a little bit of DFP. So I think as we sit here today, Three of the 17 deals under construction are DFPs. And then as we look to our '25 starts, time will tell, but my guess is maybe similar proportion, probably 2 or 3 out of 10 or 12 starts would probably be DFP. Those come quicker. So they're a little -- not quite as easy to predict, but that's our expectation.
As it relates to the townhome component, so we have the one 100% townhome community under construction today, which is a DFP deal that's Avalon Plano. And then we probably have two or three other communities currently under construction that have a townhome component to them. I'm just looking at the list now, like Norman, Wayne, two deals in New Jersey, Pleasanton out in the East Bay, actually has some town homes, Techridge in Austin has some townhomes. So any time that we can mix it in, we will, and we see that more and more with some of our garden communities, where we might do a very typical deal like look at an Avalon Wayne in Northern New Jersey, it's, I think, 470 or 450 units, it's maybe 50 townhomes and 400 stacked flats, and that's been a great formula for us.
Alex Kim
Got it. That's very helpful. And then -- just another one on the BTR business. As you expand your exposure to the product type, are there any plans to ramp overhead this year? Or will you continue leveraging your existing capabilities?
Matthew Birenbaum
So one of the nice things about the DFP is that it doesn't come with the same internal overhead. We do third-party developers, their overhead through paying them developer fees, but it doesn't require incremental overhead on our platform. So we don't see that as a driver.
Operator
We have reached the end of our question-and-answer session. I would like to turn the conference back over to Ben Schall for closing remarks.
Benjamin Schall
Thank you, everyone, for joining us today, and we look forward to speaking with you soon.
Operator
Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.
