Multifamily Update

From Yardi Matrix

By Joel Nelson on Jun 13, 2018 in News

What’s the verdict on the U.S. multifamily market—healthy, ailing or somewhere in between? Data presented in a recent webinar led by Yardi Matrix indicates that the news is mostly good.

“Despite a fair number of headwinds that include decelerating rent gains, growing supply, the advanced age of the economic cycle and the increase in interest rates, the multifamily market remains in a healthy state,” says a presentation delivered by Jeff Adler and Jack Kern, vice president and director of institutional research, respectively, for Yardi Matrix.

Positive signs for the U.S. multifamily market include:

• The economy, which grew by 2.3% in 2017 and the first quarter of 2018, added more than 200,000 jobs so far in 2018 and spurred a high level of consumer confidence;
• Plateauing rental unit deliveries combined with steady economics that will increase rents by an estimated 2.9% in 2018;
• Rising wages and a tight job market that “pulls people off the sidelines”;
• Moderate inflation

Potential crosswinds include:

• Demand—meaning jobs and population—which, while strong, is shifting to lower-cost cities, driving a gradual rise in homeownership;
• Increasing financing costs;
• Abundant multifamily capital, holding cap rates steady and compressing spreads;
• New supply deliveries that are still being absorbed in many markets.

There’s lots more insight in the full webinar.  The recording, presentation and accompanying report are available here.