Outlook Remains Positive for the Remainder of 2017
Through the first half of 2017, the economy’s growth continued to support strong multifamily fundamentals, while the market continued to moderate on a national level. Below are a few key highlights from my report, which includes more details and commentary:
- Employment growth will stay above population growth, fueling demand for housing units
- Demographic and lifestyle preferences will continue to favor rental housing choices
- New completions are expected to peak in 2017, possibly into 2018, pushing vacancy rates toward historical averages. Completions will remain elevated but as new construction starts have leveled out, completions will as well.
- Low vacancy rates in most metros signal stronger demand than supply, but with new supply entering the market, vacancy rates will increase, albeit slower than originally forecasted.
- Absorption of new units in some areas will take longer than in prior years due to high levels of new supply, which will hinder landlords from increasing rents as rapidly.
- Origination volume will hit another record in 2017, despite a slower start to the year.
While demand and supply remain relatively tight at the national level, results at the metropolitan level varies:
- San Francisco, New York City and Boston are feeling the effects of high supply, but are expected to see some rebound in rent growth by the end of 2017, and will remain at or below their historical and the national averages
- Nashville saw new construction starts pull back, while construction has increased in Fort Worth, Colorado Springs, and Raleigh
- Rent growth will moderate most in areas that previously experienced the highest levels of growth – such as Seattle, Tacoma, Sacramento, Nashville, Portland, and Atlanta – but remain above historical averages there
For additional information, read the full report
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