Multi-Family Industry Outlook Positive through 2015
12/3/2012 1:45 PM
Submitted by J. Debes
New construction for 2012 should result in 55,000 units for the year, well below the average of 125,000/year of 2000-2009. New construction for 2013 is projected at 130,000.
Freddie Mac recently forecast demand of 1.7 million new multifamily renter households through 2015 due to decreasing homeownership. A recovery in the single-family housing market may slightly damper demand for rental housing.
REIS projects vacancies to remain in the low 4 percent range through 2015.
Increases in household income, which have remained stagnant in recent years, will likely dictate owners ability to increase rents over the next several years. Moody's has projected GDP growth of 2.9% in 2013 and over 4% for 2014 which hopefully translates into growth in household incomes and rent rates.
Equity Residential's purchase of the Archstone portfolio from Lehman Brothers Holdings of 78 properties of 23,000+ units at $367K/unit (5% cap rate) seems to support an industry consensus for the continuation of strong industry fundamentals.