Multifamily Midyear Review Shows Good News, Bad News

Renting remains strong, but deal activity is down.

Recent reports chronicling the economic condition of the multifamily marketplace at midyear shows a mix of good and bad news. According to Berkadia’s National Trends Multifamily Report for Second Quarter 2019, the current occupancy rate is 95.7%, which is up 30 basis points as compared with 2Q 2018 while effective rent is up 3.1% for the same period. Berkadia attributes the multifamily good news to the high cost of homeownership.

“As the cost of homeownership continued to rise across the United States, renting remained the preferred housing option. At $280,200 in May 2019, the median sales price of existing single-family homes advanced 4.6% year over year. At the same time, home sales velocity decelerated 1.1%, suggesting many Americans were priced out of homeownership.”

Berkadia also notes a rise in leasing activity as residents newly occupied 330,531 net units since mid-2018, up from 323,064 units absorbed during the year prior. Developers have been responding to the need for more apartments by adding nearly 290,000 new units to the nation’s multifamily housing stock, a rise of 3.6% higher than the number of units added during the previous five years.

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