Shifting Demographics Premonish a Healthier Multifamily Sector
Apartment Finance Today reports: In the recent November/December issue of Apartment Finance Today, Real Capital Analytics’ global chief economist Dr Sam Chandan supported columnist Jerry Ascierto’s thesis that shifting demographics are bolstering the multifamily sector’s robust recovery. Mr Ascierto asserted in his article that a combination of factors - including the growth in the 18- to 34-year-old cohort that is increasingly populated by the larger-than-average Generation Y, societal trends, and stagnant employment - are expanding the pool of renters. The baby boom parents of the Gen-Yers are also entering the renting population, as they look to downsize their taxable living space and/or are evicted from their underwater homes as a result of the recession.
Typically, Mr Ascierto stated, one would expect the multifamily sector occupancy rate to increase during strong economic times with rising employment. With the current high, long-term unemployment and negative jobs outlook, the latest improvements in apartment occupancy is counterintuitive. Rather, it is a result of the poor economy that has reduced home ownership, driven young adults to move back in with parents or room together in a rental, or even pushed senior citizens out of their homes. The majority of newly-arriving immigrants rent regardless of the economy. As a result, “A hefty 77,000 apartment units were absorbed in the first half of 2010, the strongest demand in a decade.”
The most overlooked group of those potential renters are aging baby boomers. Mr Ascierto stated frankly that, “Three-quarters of retiring boomers said they want to live in mixedage and mix-use communities…The impact of the baby boom generation on seniors housing is only just beginning to be felt.” On whether incoming senior citizens will chose traditional multifamily situations, Dr Chandan was quoted as stating, “The readiness and willingness of a senior household to make this transition depends upon the salability of their home…An improvement in overall housing outcomes should support a larger number of people making the transition to independent living.”
For more on the demographic-driven future of multifamily commercial real estate, please see the full article on the Apartment Finance Today’s site.
View the full article on Apartment Finance Today: Shifting Demographics Premonish a Healthier Multifamily Sector
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Posted by: Nina Turner