Why Multifamily is About to Have a Good Decade

There are over 300 million people residing in the United States.  Based on the severe financial stresses these past eighteen months we  have 8 million fewer jobs, but no fewer people.  Christmas sales were slightly higher last year than the year before, auto sales are stabilizing, the savings rate is increasing, jobs losses are decreasing.  And the  population continues to climb.  It seems regardless of economic happenings people continue to have babies.  And babies, and their siblings, need housing.

We’ve heard much in recent months about the shadow rental market and how foreclosures are competing with multifamily for renter’s.   Remarkably, multifamily defaults have not skyrocketed throughout these massive shocks to our financial system.  Multifamily properties remain stable, continuing to provide housing for nearly a quarter of the nation’s population.   And this too shall change.  There is a silver lining to many of these occurrences.  One of them is that multifamily apartment owners  are about to have a very good decade.

 While we were all glued to our  ‘tubes” watching MSNBC and FOX describe the end of the world as we know it a few things didn’t change; people continued to consume food and shelter.   And have babies.  In the last eighteen months construction starts have fallen off a cliff to an annualized rate of 600,000 units.  That level of construction was fine with a national population of 180 million people, but significantly under our current (and future) housing needs.  Also, along the way, credit has disappeared.   As most have noticed obtaining a mortgage is no small task in this market. 

Less access to credit means fewer home owners.  Fewer home owners means more renters.   And even though our population is aging the age quotient of renters is expanding as there are  now more age 50+ renters than ever before.  Adding these factors to the last two years of historic low new construction and we submit that multifamily owner’s are about to have a very good  decade.

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 management and acquisitions. This blog is intended to be informational only and does not provide legal, financial or accounting advice. Seek professional counsel. We discuss best practices in multifamily management and methods related to how to buy apartment complexes. Our focus is sharing strategies and tactics that can be implemented and measured. For more information, visit: http://www..MultifamilyInsight.com 

Add Comment