Multifamily and the World Around Us

From a birds-eye view the multifamily market is poised to have a strong future with at least modest rent growth gains and good absorption of new product.  Rent growth is pressured by limited increases in payrolls and paychecks, however, with limited new construction in the pipeline (as compared to historic norms) vacancy should tick down.

If you are like me its difficult to watch the nightly news regularly.  First of all, we have so many other options; smart phones   and pads being front and center. The noise level, all the same, can be distracting.  Nationally, multifamily should have a fine year.  Following are my thoughts on what will be the biggest offenders next year in terms of creating noise.

Presidential Election.  With election spending poised to create another record, probably with the word “billion dollars” in the mix, the most powerful job in the world will be in play for the next four years.  Democracy, as we use the term loosely,  certainly has some interesting twists.  I am only sorry  our “real” economic problems will takes a back seat to the show.

U.S. unemployment rate.  Congress will have limited effectiveness in an election year to implement anything that will have a material impact on US unemployment.  Like the Fed, part of their calling is to support private sector strides in keeping a sound economy and full employment.  Historically, full employment makes for a lot fewer recessions, revolts and revolutions. Note to Congress: so its kind of important for national stability.

This action should be paramount, but in an election year lip service will be the norm leaving the issue to the next administration.  Even with U-6 unemployment at 16% it seems politicians have other objectives to pursue.  This matter more than any other will dampen multifamily prospects going forward as people without income cannot  “un-pack” from doubling up in apartments.

Deficit Reduction.  See my blog entitled “Super Committee Blues”.  This cycle the words decisions and Congress seem to have a hard time finding their way into the same sentence.

QE3.  Major noise producer.  Will receive more print than it takes to print the actual currency.

European Recession. We all know it is coming. nothing we can about it.  Will only nominally impact US global exports.  Second only to QE3 in terms of press coverage.

Arab Spring.  From Egypt to Libya  full nations have removed national leaders in a quest for change. Whether for democracy or some other form of government these transitions will takes years, or generations, to settle.  This is part of the continuing saga of oil price instability.

China.  If Europe sneezes does China catch a cold?  With a pending recession in Europe and Chinese exports already slowing what happens to world-wide oil prices with a slowdown in the world’s most populous country?  Oil prices always seem to rise quickly, yet are sticky on the way down clinging to gains outside anticipated price range predictions.

Weather.  One of the biggest global events of 2011 was the Tsunami that hit Japan killing thousands and knocking a nuclear reactor off line.  Another was major floods in Asia that all but shut production of high-demand computer components.  Domestically, there was the tornado in Joplin Missouri that killed more than 150 people in seconds.

North Korea.  With a new unknown leader of unknown quantity, media will be falling all over itself to tell us all the things we want to know about the new regime that continues to “play nuclear” even though everyone  knows this is no game.

Keep focus on running your assets. Devoting hours to the daily news can be draining and unproductive.  Make sure to vote in local and national elections- your participation is imperative.  Maintain control in areas you can control and place the rest in perspective with a healthy dose of realism.

About This Blog
Multifamily Insight is dedicated to assisting current and future multifamily property owners, operators and investors in executing specific tasks that allow multifamily assets to operate at their highest level of efficiency. We discuss real world issues in multifamily property management and acquisitions. This blog is intended to be informational only and does not provide legal, financial or accounting advice. Seek professional counsel.  For more information, visit:

Add Comment