Existing Housing is Up, New Housing is Up - What"s Up With the Real Estate Market?
Where is the housing market going? Existing housing is running over 5,000,000 units sold on a national basis.
New homes are running at historic lows.
What does all this mean if anything to the commercial real estate market and especially to multifamily housing? Of course, we are crystal balling when we ask this question.
So I may as well leap right into the fray.
New home purchases were at an annualized 333,000 as I write this.
At the same time, there are less than 225,000 homes under construction on an annualized basis.
At the same time, we can be sure that the U.
S.
isn't shrinking from a population perspective.
Also, we can be certain, that the demographics on young people moving to adulthood and toward their eventual own housing needs are not reversing either.
So, in the midst of all the doom and gloom I often write about the need (or lack thereof) for new housing, I believe multifamily housing requirements will fly in the face of this statement.
We will see continuing and growing demand for multifamily housing as the economic environment continues to stabilize.
And yes in my opinion, even if housing continues to ride downward the economy will continue to improve slowly but surely.
So, investors who can find the right multifamily development opportunities are likely to be well rewarded for their investments by strong steady and growing occupancy and revenue per unit.
I believe this will be the case because of the demand component noted earlier and because baby boomers will slowly migrate toward more multifamily housing with income and wealth that will support growing rents.
If this is the case, what is the right multifamily developer to invest capital with? The short answer is experienced ones.
In addition to experience, the multifamily developer should offer strong financial capacity for cash and for asset value.
The developer should have limited exposure to the downturn.
The developer should have real live investments in the works with committed debt capital.
They should offer a proven record of operating success and exit success for investors.
They should be focusing on markets that demonstrate the economic backbone of the next decade.
In my estimation this is knowledge work, health care, government centers, commodity distribution and so on.
The market should demonstrate strength in the face of the ongoing issues.
Investors selecting developers based on these criteria focused on multifamily are likely to achieve strong sustained returns.
New homes are running at historic lows.
What does all this mean if anything to the commercial real estate market and especially to multifamily housing? Of course, we are crystal balling when we ask this question.
So I may as well leap right into the fray.
New home purchases were at an annualized 333,000 as I write this.
At the same time, there are less than 225,000 homes under construction on an annualized basis.
At the same time, we can be sure that the U.
S.
isn't shrinking from a population perspective.
Also, we can be certain, that the demographics on young people moving to adulthood and toward their eventual own housing needs are not reversing either.
So, in the midst of all the doom and gloom I often write about the need (or lack thereof) for new housing, I believe multifamily housing requirements will fly in the face of this statement.
We will see continuing and growing demand for multifamily housing as the economic environment continues to stabilize.
And yes in my opinion, even if housing continues to ride downward the economy will continue to improve slowly but surely.
So, investors who can find the right multifamily development opportunities are likely to be well rewarded for their investments by strong steady and growing occupancy and revenue per unit.
I believe this will be the case because of the demand component noted earlier and because baby boomers will slowly migrate toward more multifamily housing with income and wealth that will support growing rents.
If this is the case, what is the right multifamily developer to invest capital with? The short answer is experienced ones.
In addition to experience, the multifamily developer should offer strong financial capacity for cash and for asset value.
The developer should have limited exposure to the downturn.
The developer should have real live investments in the works with committed debt capital.
They should offer a proven record of operating success and exit success for investors.
They should be focusing on markets that demonstrate the economic backbone of the next decade.
In my estimation this is knowledge work, health care, government centers, commodity distribution and so on.
The market should demonstrate strength in the face of the ongoing issues.
Investors selecting developers based on these criteria focused on multifamily are likely to achieve strong sustained returns.
Source...