An excellent piece on the state of the multi-family market from Co Star. Despite the recent surge in new construction, vacancies are lower, rents are higher, and demand shows little sign of slowing.
This trend is expected to continue for at least the next several years. From the article:
Despite concerns over the large number of new apartment units being built across the country and high market valuations, the multifamily rental market continues to hum and may be on track for several more years of growth, according to the latest Freddie Mac Multifamily Outlook.
The multifamily sector was the first to recover following the Great Recession and new supply has been coming online at elevated levels ever since the 5-year streak of robust growth began.
Freddie Mac doesn’t see that abating any time soon. In fact, the government-sponsored entity reports supply will continue to enter the market at elevated levels and reach higher levels of apartment completions not seen since the 1980s….
As of this summer, CoStar data showed national vacancies dropping below 4%, with year-over-year same-store rental growth at a solid 3.9%. Demand was holding up stronger than expected, extending the supply-demand balance.
If supply growth doesn’t accelerate further, or slows down while developers consider new projects, the current trend could keep vacancies low while bringing rental growth close to or above levels observed during the 2012 peak, according to analysts with CoStar Portfolio Strategy.
The current economic environment continues to favor renting over owning and that trend is supported by the most recent U.S. Census Bureau data and CoStar analysis.
Entire article can be viewed here: http://www.costar.com/News/Article/Analysts-See-Multifamily-Market-Remaining-Strong-for-Several-More-Years/176235