High Quality Stats Show Multifamily Properties Are the Place to Be for Investment for 2010 to 2020

Recent rental and housing statistics compiled in 2010 show clearly that multifamily and rental investing is the place to putting capital. Information from the Department of Commerce, the University of Utah, the Urban Land Institute, and the Census Bureau provides compelling facts showing that urban center multifamily demand will outstrip supply and demand for multifamily in general will be at all time highs over the next decade. Investors, developers, and professionals in these markets have much to be excited about. 2010 continues to be full of interesting news for those of us in the rental business and especially multifamily. Here are facts to get your attention:

• 50% of new household formed over the next decade will be multifamily. Please note that this is multifamily and not rental alone.
• By the end of the decade home ownership will be less than 62% down from 69% in 2005.
• 77% of Gen Y / Echo boomers prefer urban living.
• Rental demand is anticipated to move up sharply in 2010.
• The U.S. is on a path to 438 million by 2050 from 310 million today.
• Housing density has moved downward since 1940, but recently has ticked upward. This trend in the future is not clear, but the square footage per resident is expected to continue to trend downward as the urban trend gains momentum.
• Demand is expected to far outstrip supply in major market urban centers.
• Gen Y households will rent significantly longer than their parents before them because home affordability will come later in their working careers and because they are likely to choose to have children at a later age.
• Aging babyboomers will add to rental demand because of wealth loss and normal increased renting by older households.
• Babyboomers living in McMansions will struggle selling these assets especially late in the decade.
• The big winners are expected to be the largest metro areas including NYC; Washington, DC; Atlanta; Miami; Houston, San Francisco; etc.

The sources for this information are University of Utah, the Urban Land Institute, the Department of Commerce, and the Census Bureau. All this points to a few significant identifiable opportunities for investors. Developers producing new class A properties in major high growth markets will thrive. Investors purchasing and operating urban center multifamily projects will be the beneficiaries of exploding demand and strong value appreciation. McMansion properties are high risk unless converted to high density housing. Single family development opportunity will remain weak for the balance of the decade and possibly beyond.

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