Multiplicity of multi-family stats

Is the multi-family market due for its fair share of moderation, or will it only continue to boom for the foreseeable future?

In LBM, keeping one’s eye on the prize is generally synonymous with watching the single-family market in particular. But the volatile multi-family sector is an area that’s seen quite a bit of growth and potential in the recent months.

The 2017 Trends Report from PCBC highlighted multi-family as an area that’s once again on the verge of a sea change. According to Rick Haughey, VP Industry Technology Initiatives at the National Multifamily Housing Council, new construction is beginning to catch up to demand in certain cases, and older Millennials are finally settling down (read: buying homes).

Though this is leading multifamily investors to switch investment strategies, Haughey believes market fundamentals will continue to enjoy historically high standards owing to demand from Generation Z and Baby Boomers. Additionally, new technologies are providing plenty of fodder for disruption in multi-family that doesn’t exist with single-family: dedicated Uber waiting rooms, for example.

With more dealers eyeing the big payoffs of multi-family housing, here are a couple stats to consider as we head into this new paradigm.

• One-third of apartment managers said they would be open to partnering with a short-term rental company in order to capitalize on the growing popularity of AirBnB, according to a recent NMHC survey.
• Boomers are an unexpected source of demand for multi-family, but there will be 10,000 of them turning 65 every day for the next 12 years, according to Haughey.
• Housing starts for buildings with five units or more were 385,000 in March, up 9.1 % over March 2016.
• According to CoStar Group, the moderation that was expected to set in this year might evade us. As of the end of Q3 2016, the multi-family market currently has the lowest vacancy rate at 5.2%, and average rental rates were up 3.9% from 2015.
• Markets like Atlanta, Nashville, and Seattle are seeing moderation in rent prices, while rents in the Bay Area are poised to rebound in 2017. New York City rents will experience suppressed growth as new supply enters the picture, according to Freddie Mac.