Multifamily Ready for Another Strong Year, Mortgage Giants Say
The multifamily sector is poised for a healthy 2014, but after this year, growth is expected to moderate to more historical levels, according to a new analysis by Freddie Mac and Fannie Mae.
“As the broader economy continues to grow, we expect the overall multifamily sector to remain strong in 2014,” says David Brickman, executive vice president of Freddie Mac Multifamily. “Revenue growth in the industry will continue to perform near or above historical averages, but at lower rates than the previous two years. The growth in some markets, however, has already slowed down and vacancy rates in a select few are inching up.”
Many major markets are posting vacancy rates that are below historical norms, which are decreasing concerns about overbuilding in the sector, Brickman says. However, vacancy rates in Washington, D.C., and Norfolk, Va., are higher than historical averages, which could put these markets at a higher risk of a slowdown if supply increases more, Brickman says.
Fannie Mae notes the following factors will be major drivers of continued high demand for the multifamily market this year: improving job growth, an increasing number of renter household formations, new apartment supply, and rising for-sale home prices, says Kim Betancourt, Fannie Mae’s director of economics, multifamily economics and market research.