Increased demand for rental housing has turned the apartment market into the ‘poster child of good news’ for the housing industry, David Brickman, Freddie Mac's senior vice president of multifamily operations, writes in the latest installment of the company's Executive Perspectives Blog.
With a ‘significant increase’ in immigrants, 20-34 year olds and baby boomers – including former homeowners – entering the rental mix, the multifamily segment is on pace to require $1 trillion in capital and 10 million additional apartment units over the next decade, Brickman says. For the 12 months ending mid-year 2011, the Census Bureau reported a net increase of 1.4 million households that moved into rental housing.
The market has been barren of new apartment construction for the last two years, Brickman adds, suggesting demand could soon outstrip supply.
"The good news is that new construction projects are under way in some metropolitan markets, with plans for more," he writes.
According to his blog, 1 million individuals become renters for every 1% that the current homeownership level of 66% falls.
"The bottom line is that the multifamily market is poised for growth due to strong demand, healthy fundamentals and limited supply," Brickman says. "These trends have renewed interest in the sector, and investors are returning, as evidenced by an increase in acquisition and refinancing activity."
