Multifamily Housing: The New American Dream?
Despite subdued activity in many other real estate segments, multifamily housing construction has been on an upward trend for the past four years, even surpassing the 20-year average in 2013. With nearly 295,000 apartment units under construction and more than 878,000 in the planning stages, many industry watchers are wondering if all that construction is sustainable. Senior economic research analyst Jessica Dill explored that question in the May—August issue of EconSouth.
In most markets, it's now cheaper to buy a home than to rent an apartment. Also, recent findings suggest that coming up with a down payment isn't the hurdle many potential homeowners assume it will be. These factors combined could be tilting more households toward homeownership and sapping demand for multifamily housing, Dill noted.
Of course, as with many consumer trends, the preferences of the millennial and baby boomer generations will greatly influence the longer-term trends in multifamily construction. Those two groups appear to be pulling in opposite directions. Although many millennials are not yet financially equipped become homeowners, surveys suggest younger consumers still think buying a home is a good deal. "Many of today's renters will likely eventually make the transition to homeownership, which would reduce the demand for apartments," Dill explained. However, as baby boomers reach retirement age, the desire for a simpler lifestyle and fewer financial obligations may exert an opposing influence, she added.
To read more about current trends in multifamily housing construction and where they might lead, check out the full article in the May—August issue of EconSouth.