Your Property Path Real Estate News Brief: Multi Famiily Rentals Improve

The demographics

The multifamily sector is in recovery. According to Reis, net absorption in 3Q spiked, dropping

the national vacancy rate from 7.8% to 7.1%, one of the largest quarterly drops on record.

Rents increased for the second quarter in a row. Asking and effective rents increased by 0.5% and 0.6% respectively in the third quarter over the previous quarter.

Renter demographics
Who Are They

People Needing Flexibility
Renting can provide more flexibility, greater convenience and lower costs than buying a home. As a result, certain households are more likely to rent than own, including young singles starting out, families relocating to a new metropolitan area, recent immigrants to the United States, and low-income household

In Transition
such as a change in job or marital status. For example, over 60 percent of households that moved in 2003 because of divorce or separation chose to live in a rented unit.

Relocating
For owners who are relocating, rental housing can be a good option if they expect to move again within a few years.

Immigrants
When birth rates among the native born population fell sharply after the baby boom, many feared that rental demand would drop off precipitously. But thanks to the strength of immigration, the number of renter households remained steady through the 1990s and early 2000s as foreign-born households supplemented the rental demand of native-born households. The arrival of young foreign-born households thus tempered the decline in renters aged 25–34 from 20 percent to 12 percent, and in renters aged 35–44 from 18 percent to 7 percent over the 1994–2004 period. Indeed, without these immigrants, the total number of renters would have fallen by more than 2 million (5 percent), rather than rising modestly by 100,000.

Retirees Moving Back
As the baby boom population ages and their children leave home, some will opt for moving out of their homes and into apartments that require less upkeep and allow them the freedom to do what they want.They fit into he category of lifestyle renters. Not wanting or needing the cost and obligations of home ownership and choosing the mobility that comes with the lesser commitment of renting, expect a lot of retirees coming back into citys for ease of access to theater, larger communities of like interests and excitement not available in suburbs.

Echo Boomers
National Association of Housing Builders chief economist believes that 83 million echo boomers will enter residential renter market and lead the demand for apartment units over the next few years, approximately 3.2 million between 2010 and 2012. This demographic trend coupled with a strong immigration trends will drive apartment fundamentals. This housing crash happens in the formative years of this population. Will the bias towards home ownership still hold or will echo boomers, raised during this crises, hold a bias towards renting over ownership.

Its clear that rental property will have a brighter future and likely to recover first. The caveat here is that jobs will be a determining factor. If job growth is meager then echo boomers may stay home longer or double up as roommates.

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