By Lucas Goring
Multifamily properties have always had a seat at the commercial real estate table. Whether it is young couples who are not ready to settle into a permanent address; people with credit profiles who do not qualify for a mortgage; people who prefer the flexibility of being able to move addresses easily; or simply someone who never wants to own a snow blower or lawn mower. Multifamily properties serve a need for a wide range of residents.
Rents and occupancy rates continue to soar as the US homeownership rate has fallen to near historic lows. In the second quarter of 2015, the homeownership rate was 63.4%, compared to its peak of 69.2% in 2004. People still need a place to live, and multifamily properties are able to capitalize on the excess demand.
This excess demand is the driver behind the cranes in the sky putting up new developments. According to the US Census, multifamily apartment starts rose 55% in June 2015, compared to the previous June. In comparison, single family starts increased 15%
Acquiring a single-family home, especially for a first time home buyer, has become an increasingly difficult task. Home prices continue to rebound from the Great Recession and the demand is approaching, and in some cases, surpassing the supply of available houses, which increases the price. That, along with tightening lending standards, has made home ownership more difficult.
Multifamily properties are the chief benefactor of the rising home prices and tightening lending practices. The demand for units has increased the value of multifamily properties as cap rates continue to head south, with some even reaching into the 4%’s.
Rising rents, decreased vacancy, greater demand – now is a great time to be an owner of multifamily properties!
Lucas goring is available now to discuss potential multifamily investments, assist with analyzing cash flow for your portfolio, and provide a no-obligation quote for financing for your next commercial real estate project. contact us today!
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