Stars Align for Multifamily Market's Rise
Wall Street Journal reports: Support for momentum in the multifamily/rental sector continues to build, with a recent article in the Wall Street Journal detailing the property type’s attractiveness and elevated prospects versus other property types. A confluence of expanding demographics, limited product coming on line, and a recovery in the nation’s economy have spurred the multifamily sector’s rapid turnaround. In fact, pricing and other metrics for apartment properties have become so robust over the past two quarters that sales and demand for rental properties is closing in on boom-era levels.
Of this encouraging trend, Real Capital Analytics' Managing Director Dan Fasulo warned the Journal that, “The days of buying and flipping a property for quick profit are long gone. But investors who purchase apartment buildings, perhaps as part of a retirement portfolio or estate plan, are seeing better deals now than at any time in the past decade…On the cost side, housing prices are low and falling in many areas, while mortgage rates are near historic lows. On the income side, apartment rents are near all-time highs.”
The Journal provided additional reasons for the multifamily sector’s current bull market: single-family home foreclosures have accelerated over the past two years, with five million more expected to occur by the end of 2012 according to RealtyTrac.com. Families pushed out of those homes by lenders will provide ample demand for an increasingly well-occupied multifamily market.
With so much upside for apartment owners in terms of rent and revenue, the market’s largest players – including REITs and institutional buyers – are acutely pursuing multifamily opportunities before pricing brings down initial cap rates.
View the full article on Wall Street Journal: Stars Align for Multifamily Market's Rise
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Posted by: Nina Turner