The multifamily housing market looks to be stronger than ever this year. Across the nation, unit vacancies are down, job growth is strong and the pool of rental applicants is growing. Since the last recession, rent growth has outpaced the long-term average and property values have soared. The general emotions at the National Multifamily Housing Council (NMHC) on January 19th, 2016 were that now, more than ever, is a great time to be in the multifamily industry.
2014 Momentum Is Propelling 2016 Growth
According to full-year numbers released at the NMHC annual conference, multifamily sales were at a record high in 2014, up over 32 percent. By 2014 the market had recovered from the 2007 recession and panelists at the conference generally agreed that this growth would continue into 2016 and beyond. This prediction is based off continued multifamily success in 2015. Multifamily completions saw a spike in the first half of 2015, 285,000 units, annualized, entered the market – the highest level post recession. Their optimism was also fueled by the following points:
- Vacancies are very low throughout the nation with demand driven by strong job growth.
- The renter pool is ever growing: millennials, as well as older individuals, are seeking rental housing across all metropolitan markets.
- Capital is readily available for development.
- Chances of a repeat of the 2007 recession seem slight. Residential investments and housing starts are seen as a strong predictor of economic success. With permit rates up, millennial and baby boomers renters up, and unemployment down – the future is optimistic.
- Southern metropolitan areas such as Charlotte, Raleigh-Durham, and Houston have seen substantial increases in population thus creating strong demand in those rental market.
The Future of Multifamily Housing
In his 2016 State of the Union address, President Obama called for an increase in access to affordable housing. Responding to his call, the NHMC issued a response to the State of the Union, calling on the federal government to make it easier for developers to increase the housing supply by reducing red tape, and “addressing housing and tax reform in a way that recognizes the unique characteristics of the apartment industry….” The NHMC estimates that developers must build at least 300,000 new multifamily units each year to simply keep pace with demand. This can best be accomplished if local, state and federal governments remove existing barriers to development and redevelopment.
Live Oak Contracting believes the multifamily housing market is particularly strong. Our recent white paper discusses our predictions for the 2016 market in depth, including regional growth expectations, single-family vs. multi-family increases, demographic factors, and federal interest rates. To read more, download our white paper, Construction Permits: 2015 Reports and 2016 Forecast.
When you are ready to move forward with your multifamily development, contact Live Oak Contracting. We’ve got the experience and expertise to bring your project to life.