Friday , 2 June 2017
Home » Beyond Today’s News » Duck! The Rental Balloon is Starting to Leak

Duck! The Rental Balloon is Starting to Leak

It had to happen.

Put too many billions into building new apartment buildings atop subway stops and exurban min-cities and you can bet your bottom dollar the multifamily folks will end up with too much capacity.

Not even massive demand from Millennials can deny the forces of supply and demand.

Here’s the latest.

  • “Fresh supply is beginning to overwhelm demand. More than 378,000 new apartments are expected to be completed in 2017, a 30-year high, according to real estate researcher Axiometrics Inc. In the fourth quarter of last year, 88,000 units were completed but only 50,000 of those were rented by tenants, according to MPF. Now banks are in retreat, forcing developers to look to nontraditional lenders and seek more expensive types of financing to complete projects, said apartment executives, industry analysts, mortgage brokers and bankers, wrote the Journal’s Laura Kusisto February 21.
  • “Going forward, peaking supply will impact multifamily fundamentals, particularly in the CBDs where pricing is vulnerable and supply is mounting. Annual rent growth, while still positive, has softened under the weight of new supply throughout 2016. But the softness appears, at least for now, due to a focus among operators to keep occupancy above historical norms. The big question will be how demand will respond to the record supply levels,” said MPF on February 22.

  • The national occupancy rate declined for the fifth straight month, ending January at 94.4%, a 12-bps decreased from December’s 94.5% and 26 bps lower than the 94.7% of January 2016, reported Axiometrics February 9.
  • “The West Coast leads the country in annual increases with Sacramento and Stockton at the forefront. After a 9-month growing streak, rents began to cool off in September, with December cementing the idea that the rental market is indeed softening. The intensified construction activity that saw new apartment inventory levels grow by 50% in 2016 compared to 2015 (320,000 vs. 200,000 new units) had a huge say in the evolution of rental prices this past year,” reported RentCafe January 9.

Sound familiar?

One comment

Leave a Reply

Your email address will not be published. Required fields are marked *

*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

 

Earn a 25% Commission Rebate on Any Home Purchase!

Hide