It’s an election year and there are predictions of looming economic headwinds in the face of trade disputes, geopolitical tensions, and other issues. Many investors may be feeling sheepish as 2020 begins, but experts agree there’s a prime opportunity for investments in the multifamily housing sector thanks to continued job growth, changes in consumer spending, and lower interest rates.
At the 2020 National Multifamily Housing Council’s Apartment Strategies Conference in Orlando, speakers on the debt trends panel highlighted a healthy market with plenty of capital for investment supported by the projections made by the Mortgage Bankers Association.
At over 80 million strong, the youngest adult generations in America are the most significant contributors to the ongoing demand for multifamily housing. Millennials and Generation Z continue to look for multifamily housing options according to economic and market commentary from Fannie Mae’s 2020 Multifamily Market Outlook. This demand is only expected to increase, especially in the rental sector.
Overall, vacancy rate and rent growth will follow similar trends from 2019 with the vacancy rate inching a bit higher due to increased supply in some areas and rent growth remaining positive. Rent growth ended around 2.5 percent in 2019 and is expected to remain between 2.0 and 2.5 percent in 2020. Now in the 11th year of this current expansion cycle, the market remains durable.
This durability is clearly evident in Austin, Atlanta, Phoenix, and Boston according to research from CBRE. Significant growth is skyrocketing the demand in Austin. Atlanta’s rent growth has established the city as a leader in multifamily performance. That trend is expected to continue in 2020. Phoenix’s performance in the industry can be attributed to job growth and net operating income increases. Boston’s historically low unemployment and higher wages and salaries have designated it as an emerging gateway market.
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