Multifamily Update

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.

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.

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AUTHOR

Joel Nelson, senior marketing writer, joined Yardi in 2007. His byline has appeared in New York Real Estate Journal, Canadian Property Management and Los Angeles Lawyer, among others. He has won multiple awards from major professional organizations including the International Association of Business Communicators and Public Communicators of Los Angeles. Joel earned a bachelor’s degree from Pomona College.

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