HousingWire recently interviewed Greg Willett, chief economist with RealPage, an American multinational corporation that provides property management software to many sectors of the housing industry, to hear his views about the present and future of multi-family housing in 2020.
Right off the bat, Willett said, “The apartment market is in great shape. Even the lux apartment market is becoming more competitive. I see both of these current realities continuing into 2020.”
Occupancy rates surpassed long-term norms by coming in as high as 96.3% in 2019. Willett sees 2020 occupancy rates coming in even higher, particularly with more new lux properties hitting the market.
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Willett said “Increasing luxury completions point to a competitive leasing environment for luxury product in 2020. About 55,000 market-rate apartments are under construction right now. Approximately 336,000 units are scheduled to finish in 2020. That targeted delivery volume jumps sharply from 2019 completions of around 279,000 completions.”
Willett believes that occupancy rates within moderately priced products will be higher than luxury properties despite there not being many middle-market products in the pipeline. “…middle-market product will come in secondary and tertiary markets where it’s still feasible to build lower-cost, garden-style properties with surface parking. The limited deliveries of Class B & C project in most places point to continued sky-high occupancy and solid rent growth.”
The one wild card in all of this crystal ball gazing for the multi-family sector is rent control. Oregon and California are the first two states to pass statewide rent control legislation. Will other states follow suit?
And if more and more states adopt statewide rent control, will investors choose to hand over their capital to multi-family developments in those rent controlled areas?
Thanks to HousingWire’s Julie Falcon for source data.