Most in Industry Optimistic about Multifamily
September 6, 2017
We often write about what we're seeing in the multifamily market, but it's always important to hear insights from others in the industry. How do lenders, developers, builders and investors feel about the market and where it’s going? What areas pose the greatest challenges? And where should the market be focused in the future?
Today, we released the results of a survey that tried to answer those questions. We partnered with the real estate media and intelligence firm Hanley Wood to gauge individuals’ attitudes across the industry, including those working in property development; building and construction; property management; lending, financing and investing; and government and trade associations.
Growing demand underscores the need for increased investment in the acquisition and preservation of affordable rental housing.
Executive Vice President, Freddie Mac Multifamily
Here’s a bit of what we found:
Most in the industry are optimistic about the outlook for multifamily. The survey found 60 percent of industry participants anticipate the multifamily housing market will grow over the next 3-5 years, while only about 15 percent see it slowing down. Of those who believe the industry will grow, nearly one-third cite supply and demand as the justification for this continued growth, while another 17 percent cite population growth.
Many market participants believe the market should focus on energy improvements, affordable housing, seniors and working families. In asking about the areas that should be a focus for the multifamily housing market, industry participants highlighted four major areas that are extremely/very important:
- Enhancing the energy efficiency of multifamily properties (51 percent)
- Increasing the supply of affordable housing (48 percent)
- Addressing the housing needs of America’s seniors (47 percent)
- Increasing the creation of workforce housing properties (47 percent)
There is growing concern and pessimism over affordable housing options. In their responses, 42 percent of industry participants expressed declining optimism about the outlook for affordable rental housing today as compared with last year. When asked about top challenges in offering new affordable housing, 40 percent of respondents cite costs, such as those associated with land and construction, as the greatest challenge to offering affordable housing—the largest reason by far.
David Brickman, executive vice president and head of multifamily, offered the following reaction:
“The findings of this survey indicate a general consensus around the strength of the multifamily market. Confidence in market fundamentals remains high among industry participants, largely due to strong demand fueled by lifestyle preferences and demographic changes.
"But many participants are also seeing that same demand is exacerbating the affordability crisis for many families. It underscores the need for increased investment in the acquisition and preservation of affordable rental housing.
"Industry participants understand the importance of improving the energy efficiency of properties, growing the affordable and workforce housing stock and meeting the needs of our nation’s seniors – all of which will help us address our nation’s affordability crisis. Freddie Mac has doubled down in all these areas, and we are working hard to ensure we’re doing all we can to bring affordability to the rental housing market.”