Multifamily Market to Remain Strong through 2015 with 1.7 Million New Renters
November 8, 2012
The multifamily market and demand for rental housing will remain solid and healthy through 2015, Freddie Mac reported in its multifamily real estate market demand forecast. According to Freddie Mac, there will be an additional 1.7 million new multifamily renter households between now and 2015. The forecast analyzes demographic trends, housing supply and economic data. The scenario-based approach explores rental market conditions under different economic environments: slow growth, no growth and accelerated growth. "The research confirms that multifamily is a bright spot in the real estate market and the economy more broadly, and it will likely continue to shine for quite some time,” said David Brickman, senior vice president of Freddie Mac Multifamily. "The economic data indicates that current rental markets are very strong with low vacancy rates, rising rents and solid demographic trends. What this research demonstrates is that these conditions are likely to remain in place for several years to come." Forecast Highlights:
- Recent declines in homeownership related to economic stress and high foreclosures in the single-family housing market have benefited the multifamily market.
- The homeownership rate will drop 1 to 2 percentage points if the current slow recovery continues.
- The single-family rental market, a growing and distinct market from multifamily, has expanded 16 percent (about 3 million units) since 2007.
- Multifamily market demand is expected to be strong through 2015 primarily due to demographic trends and a decreasing national homeownership rate.
- Rental demand will continue to grow faster than historical averages.
- Multifamily demand is likely to be 1.7 million new renter households between now and 2015 (slow growth prediction). If the economic recovery accelerates, demand will be in 1 million new renter range; and if no recovery, then in the 1.6 million range for new renters.