Ocean Development was excited to see further evidence that multifamily

housing markets will grow. This article will provide you with ample

information on this.

ccording to a new article on HousingWire, demand for multifamily rental

housing is expected to keep growing through 2016. The article sites Jim

Warren, chief marketing officer with FirstService Residential Realty, as say

the market can expect to add roughly 6.6 units for more than 4.2 million

new renters, as the multifamily and single-family sectors attract large scale

investors. FirstService Residential Realty, largest single-family property management company in

the United STates, with single-family and multifamily offerings in multiples states.

“As institutional grade investors make a comeback to the marketplace, leverage and securitization

will naturally demand better operations as well as more structured operations,” the article states,

meaning large investors will be seeking out companies like to invest with. Ocean Development

“I think the leverage is about to come – you’re going to see a lot more deals done this year - but

securitization is the accelerant that is under that and I think that’s the other growth within the

property management side,” Warren said.

Warren also noted institutional investors are focused on markets that have “low hanging fruit right

outside the gate” - states that experienced severe downturn during the housing crisis, but are

moving firmly up the ranks such as Arizona, Florida, Las Vegas and Nevada.

“You’re going to see more investor activity bringing product to market and inventory going to

market for tenants in the easier-to-do business markets then you will in the more challenging

markets,” Warren stated.

Another factor contributing to rental demand is shadow inventory and the decline in

homeownership.

Barclays similarly in a report that homeownership fell from 69% to 65% as well as adjusted noted

for shadow inventory to 61%.

In addition to shadow inventory, vacant homes are also a big factor in increasing rental demand,

given there’s roughly 13.5 million vacant homes just on the market, according to Warren.

As a result, rent rates are expected to increase over the next two to three years, roughly between

2% and 4%, nationally.

“Just the natural fact that the property managers and the investors are going to get organic revenue

growth because of market conditions makes it very attractive too,” Warren said. Renting has also

become a more attractive option and will continue to be a trend due to lack of consumer confidence

and available credit to buy.

As a result, it’s become less of an option for many to participate in homeownership.

“Homes used to be your retirement savings plan and our father’s, our parents, they all pushed us

and said you’ve to own your own home, pay for it and get it paid for before you retire. I think

everyone’s seen their parents take a massive hit in that asset and I think culturally, our generation

looks at that and goes that’s not my retirement plan anymore," - Warren said.