The Housing Chronicles Blog: Demographics point to strong future apartment market

Wednesday, March 12, 2008

Demographics point to strong future apartment market

A good catch on the Lansner on Real Estate blog this morning about apartments. The National Multi-Housing Council is predicting that 75 million 'echo boomers' will put upward pressure on rents given that construction (aside from the over-building in the for-sale market) has not kept up with demand. What does that mean? Once the inventory overhang in single-family homes and condos is absorbed (which contributes to the 'shadow rental market'), the opportunity for multi-family investors looks very bright indeed:

“The outlook for the apartment industry going forward is very strong,” said Mark Obrinsky, HMHC chief economist. “The nation’s 75 million echo boomers are already entering the housing market, and most begin as renters. … Strong immigration levels add even more demand for rental housing.”

Obrinsky said apartment owners are benefiting from restraint during the housing boom, which kept them from overbuilding. “As a result, they have escaped the oversupply problems plaguing the single-family sector,” Obrinsky said.

Renters nationwide are expected to increase by nearly 4 million households over the next 10 years, with half of those likely to rent apartments, according to the council. In recent years, construction has only met two-thirds of the apartment demand. With the vacancy rates little changed over the last five quarters, apartment owners continue to be able to get modest rent increases.

No comments: