September 19, 2019
Yardi Matrix’ August 2019 report pointed to one issue: The multifamily sector continues to perform exceedingly well, across nearly all metros. While year-over-year growth dropped by 10 basis points from July 2019 to 3.3%, growth “has been at least 2.7% since the beginning of 2018,” Yardi analysts said. Furthermore, long-term growth has been at more than 3% for a year, and above the long-term average since the end of 2017.
Breaking this down:
- U.S. multifamily growth increased by 3.3%
- Lifestyle rents increased by 3.3%
- Renter-by-necessity rose by 3.6%
- Boston and Austin led the pack
The Yardi report continues focusing on the same fundamentals for multifamily health. These include a combination of:
- Strong demographic trends
- Social changes that continue spurring demand for new housing
- The nation’s long period of economic growth/job creation
Furthermore, despite signs of economic risk — such as yield-curve inversions — need to be weighed, “long-term trends remain more favorable for multifamily than for other segments of the economy, or even commercial real estate . . .” Yardi analysts noted.
The report did point out other economic factors that need to be monitored in addition to the yield curve. Specifically:
- Political risk, such as the China trade war and the slower growth in Europe and Asia
- An increase in moves toward rent control.
The report pointed out that, for example, “New York’s rent control has had an immediate negative impact on property values, and will likely lead to less supply and deterioration of existing rent-stabilized stock.” Added to this, NIMBYism and home rule in states such as California are putting the breaks on needed housing development.
Yardi commented that, while it will “take more than some bad policy to disrupt the multifamily market,” these trends need to be watched and planned for.
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