Here's one key stat that points to why multifamily housing might be a very wise investment at the moment: Apartment vacancies in September were at 2.7% nationwide, the fourth-straight month of record-breaking lows.
That's from RealPage, the Dallas-based property management software and analytics company, which says the vacancy rate is the lowest it's been in the company's 30-year-old data set.
"The fact that more new renters are entering the front door, but fewer existing renters are leaving out the back door is an unprecedented phenomenon that translates to a severe shortage in rental housing availability at every price point and in essentially every city across the country," RealPage deputy chief economist Jay Parsons says in an Oct. 6 blog post.
"Essentially full" in 140 of the nation's 150 largest metros
RealPage says that a vacancy rate of 4% to 5% is considered essentially full, taking turnover into account, and that as of September, it was below 4% in 140 of the 150 largest metros in the United States. The rate was below 3% in 113 markets and below 2% in 48 of them, according to RealPage. Providence, Rhode Island, and Orange County, California, were tied for the lowest vacancy rate at 1.12%.
It stands to reason, then, that tenants are also hanging onto their leases, with retention rates nationwide hitting 58.0% in September, surpassing the mark set during the height of the pandemic lockdowns in April 2020, claims RealPage.
Retention rates represent the share of renters with expiring leases who choose to renew in a given period, the RealPage blog explains. Meanwhile, a week earlier, the company reported that the demand for new leases smashed the pre-2021 peak by 50.5%.
The Millionacres bottom line
Demand is driving up rent prices, too. If this looks like a pool in which you'd like to dip an investment toe, there are a lot of ways to get started. Besides finding a multifamily place to buy on your own, you could consider crowdfunding or buying shares in a real estate investment trust (REIT) that focuses on apartments.
Given the high price of buying a home and the flexibility of not owning one -- alongside all the other demographic reasons this market is booming -- now might be as propitious a time as any to get involved in this segment of real estate investing.