Strong Q2 2012 Leads to Positive 2013 Outlook
Submitted by J. Debes
Second quarter results for multifamily this year were very good leading analysts to project another banner year ahead for market-rate housing.
Q2 Results:
- MPF Research reported that effective rents for new leases grew 1.2% for the top 100 metro markets in the second quarter, a 4% increase from the prior year. The company also reported an occupancy rate of 95.2%, up from 94.9% in the first quarter
- Rents in most parts of the country have past pre-recession levels
- Marcus & Millichap reported apartment sales volume of $24.9B in Q2 2012, a 39% increase from the prior year. Average $/unit was $101K at a 6.2% cap rate
2013 Projections:
- Marcus & Millichap expects the national apartment vacancy rate to fall to 4.4%, the lowest in 11 years with rent growth in the 3.5%-4% range
- Multifamily construction in prime markets is expected to increase. Industry averaged 300,000/year from 1997-2006 but has not topped 200,000 since 2008. Demand is expected to continue to outpace supply for years to come creating shortages of market-rate housing
- Homeownership has steadily declined from 69.2% in 2004 to 65.5% in Q2 2012 with each percentage point equating to approximately 1M households. NMHC analysts predicting ownership to drop below 60% range in the years to come
- Financing will remain tight – in the latest NMHC quarterly Survey of Apartment Market Conditions, 65% of respondents reported acquisition financing available for only top-tier locales