2017 Poised to See Moderating Multifamily Profits
Market predictions in the multifamily industry are usually pretty accurate. The same economy of scale that makes this type of investing so lucrative also makes it pretty predictable, based on demographic shifts and economic cycles. The way things look right now, this year promises to bring a leveling off of multifamily housing demand. That means slowing rent growth and slimmer bottom lines for investors.
Demographic shift: Millennials aren’t settling down
Research is telling our experts that Millennials, although they’re getting to the marrying age, are postponing nuptials, children, and home ownership in favor of higher education and paying off student debt. This move sustains demand for rental housing for that generation, and Boomers would rather live in regular communities than assisted living. But, it’s the youngest generation that poses a problem for all of the multifamily expansion that’s taken place in the last decade. Generation Z is small.
Economic growth remains slow and steady
Economists expect slow and steady growth seen in 2016 to continue this year. Employment numbers are on the rise, while job creation is declining slightly. The new administration’s effect on the national economy remains to be seen, but experts say it should be a good year for business. That could lead to more job creation, and more opportunities for Gen Z young adults to move out on their own and into multifamily units.
Big urban markets could see oversupply
The building boom of the last few years will realize more units on the market this year than in past years, which will affect occupancy rates negatively as 2017 progresses. The shift then will be to more affordable markets, which are expected to be in high demand by the end of the year as younger renters are priced out of large, urban areas.
If you’re ready to have someone in your corner who knows the ins and outs of both up and down markets, call the professionals at Class A Management today at 817-284-1411 or by email to firstname.lastname@example.org.