Many prognosticators think the great run in the apartment market is coming to an end. After performing incredibly well for the past four years,the tide is starting to turn against the marketplace.
Sweeping changes over the next two years are going to cause fundamentals in the market to weaken for the first time since 2009. Significant increases in construction activity, for example, are going to send a torrent of properties into the market over the next seven quarters. Of course, these changes won’t be uniform across the United States. So it's critical to understand which markets are going to see the most challenges.
Demand Isn’t the Problem
Although the recovery and expansion phase of the apartment market cycle is now four years old, the issue facing markets going forward is not one of demand. Demand remains relatively robust at this juncture, due to the millions of people in their 20s and early 30s who are not in a financial position (nor do they desire) to be homeowners.
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Reprinted with permission from Multifamily Executive, a publication of Hanley Wood © August 2014