Multi-family builders predict housing shortage

Las Vegas -- Industry experts speaking at the International Builders' Show (IBS) here predicted that demand for multi-family housing units will outstrip current supply by mid-2011, with increasing shortages of rental housing through 2014. This is very likely to increase market-rate rents as much as 8% to 10% per year in 2011 and 2012, and by 4% to 7% per year thereafter through 2015.

"Lack of debt and equity is crippling the private companies' ability to start new development,” said Jerry Durkin of Wood Partners in Atlanta. “Over the last 10 years, our company built about 3,500 apartment and condo units a year. In 2009, we closed on one development deal, in December."

Other multi-family builders speaking at a press conference organized by the National Association of Home Builders, sponsors of IBS, shared similar experiences.

"At its peak, our firm developed between 30 and 35 communities a year," said Michael Costa, president and CEO of MacFarlane Costa Housing Partners, which develops affordable work force housing. "But this year we have four small apartment communities under construction, and about the same number pending for 2010." The communities are all being built through federally subsidized programs, such as the low-income housing tax credit program.

Durkin added that his company hopes to start three developments and acquire four existing communities this year. The debt for these projects, he said, will come from non-traditional sources and interest from an equity provider.