Once apartments were where young adults started life; now a combination of factors are driving people at all points in their life toward apartment living. Whether it’s a change in their lifestyle or a response to sky-high housing prices, apartments are in demand and there’s a quite a shortage of them.
The Trend Toward Apt. Renting
Lifestyle changes a housing-stock shortage and high homes prices have led to more people than ever-of all ages-choosing to rent an apartment rather than buy a home and a serious apartment shortage is also in progress speakers at PCBC tell attendees.
Speakers at PCBC (formerly the Pacific Coast Builders Conference) were singing the praises of apartments, says Carrie Rossenfeld, writing for Globest.com. In fact, NHMC President Doug Bibby says “the US will need 4.6 million more new apartment units by 2030 in order to meet demand”. Expanding on that, Bibby thinks:
…the US will need 4.6 million more new apartment units by 2030 in order to meet demand…tax reform is still a risk because sector-related changes could be used as a tax cut…
Political Initiatives
Bibby noted that his organization has sent letters to President Trump and HUD regarding a rollback on affordable-housing funding regulations, and that:
…things are moving slowly on infrastructure issues, but NMHC is staying vigilant…
Market Conditions
Also speaking to the conference Ron Witten, founder of Witten Advisors LLC notes that “demand is the story”. Going on to explain, he says:
While the market took a bit of a breather with regard to absorption in Q1 after a robust Q4 2016, there is no cause for concern because annual absorption has been strong. There has been some slowing of job growth since 2015, but the under-35 cohort has filled one million more jobs year-over-year, which is good news for apartments. Lease-up in some cities has been slower because of the high number of deliveries in those markets, and the suburbs are not filling up as quickly as urban apartment units.
Demographics
Witten says that over time, more households have chosen to rent. Rossenfeld writes that Witten bases his predictions on demographics, and when it comes to apartments, Witten thinks “The under-35 crowd is well above everybody else, but the age 35 to 44 crowd is above where they have been for years, demonstrating a long-term secular shift toward apartments. People are more likely to be renters nationwide, and demographics are an enormous tailwind.”
According to Rossenfeld, Witten also thinks rising mortgage rates are pushing people toward apartment living.
While some have said the multifamily bubble is getting ready to burst, the experts clearly think the market has lots of legs left. René Nelson and the team of experts at Pacwest Commercial Real Estate stay on top of the multifamily and commercial real estate market, so you don’t have to. Visit eugene-commercial.com or give René and her team a call at (541) 912-6583.
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