The conventional wisdom about the multifamily real estate business right now is that it’s hot and getting hotter, and that conventional wisdom surely appears to be spot on.
Here’s just one metric: National asking rents rose 10.3% in August alone, the first double-digit increase in a single month in the more than 20 years of data analyzed by the RealPage rental management software company, according to a Sept. 14 article in The Wall Street Journal.
Rent increases of twice that much were recorded in markets such as Phoenix, Las Vegas, Tampa, Boise, Idaho, and Naples, Florida, according to the RealPage analysis of more than 13 million professionally managed apartments.
Indeed, factors such as more people working at home, moving to the suburbs (especially in the Sun Belt), heading back to reopening cities, and/or finding themselves unable to afford to buy have combined to drive apartment occupancy rates nationwide to a recent record high of 97.1%, says the WSJ article titled "Soaring Rents Make It a Very Good Time to Own an Apartment Building."
The construction, investing, and lending communities are all responding. "You don’t have a single private source of capital that isn’t interested in lending on multifamily," Willy Walker, chairman and CEO of commercial real-estate firm Walker & Dunlop, told the WSJ.
Investment pouring in to finance meeting demand
More than 330,000 new rental units are expected to be completed and delivered in 2021, about the same nationwide total as recorded in the past four years, according to a new report from RENTCafé. That’s despite supply and labor issues brought on by the pandemic.
RENTCafé researchers used data from its Yardi Matrix sister operation to analyze construction of rental properties containing 50 or more units in 109 different U.S. metropolitan statistical areas. They found that despite all the challenges, there were nearly three times more apartments under construction in 2021 than there were in 2011 as the nation was coming out of the Great Recession. They also expect more of the same going forward.
"Lack of entry-level housing supply and rising home prices will show the multifamily rental market demand increasing as new renters enter the market and Millennials extend their rental commitments," Doug Ressler, manager of business intelligence at Yardi Matrix, said in the RENTCafé report.
The report shows changes in individual markets. Here’s a list, too.
Here are the top 10 metro areas as ranked by new apartments being built this year, according to Yardi Matrix data.