Multi-Family Developers Experience Significant Delays

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“Construction delays and rising costs continue to thwart developers, according to the seventh edition of the National Multifamily Housing Council (NMHC) COVID-19 Construction Survey, which was conducted between May 17 and June 1.

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A record 83% of multifamily developer respondents reported construction delays in the jurisdictions where they operate. Of this group, 80% cited delays in permitting, up slightly from 77% in round six and comparable with earlier survey rounds.

These findings highlight the deep challenges that builders and developers are facing as the economy continues to recover from the depths of the pandemic. “While we are encouraged by the overall prospects for the industry, skyrocketing construction costs and a lack of available labor make it increasingly difficult and expensive for apartment homes to be built—worsening the affordability challenges facing communities across the country.

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As a result markets are in extreme housing demand and there hasn't been enough new supply to offset this demand.  This is supporting the higher rents that we are experiencing in the markets.

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To read the full article click here.

 

 

Marcus and Millichap

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"Housing shortage reiterates value of apartments. During March 2021, the supply of both new and existing home sales remained near a historic low, resulting in many potential homeowners being repeatedly outbid as prices continue to soar. The median cost of an existing home jumped 3.0 percent in March alone to $342,400, a new all-time high. Over the past 12 months, the price has surged 18.4 percent, which is the fastest pace of annual price growth since at least the 1960s. As a result, the monthly payment for a 30-year loan on a median-priced home, with a 10 percent down payment and including taxes and insurance, rose to $1,926. In contrast, the average effective rent on a Class A apartment is $1,787 per month, underscoring the value of rentals. The tight supply and rising cost will delay many renters from transitioning to homeowners, providing a bright outlook for suburban rentals.

 

To read full article click here.

Multi Families are Positioned for a Strong 2021: "The multifamily sector weathered the storm in 2020, living up to its reputation as one of the most stable commercial real estate asset classes. The forecast for apartments in the new year is also bright. And even with where things sit today with the still raging pandemic and the terrifying scene that unfolded in the nation’s capital last week, observers point to the continued rollout of vaccines and the likelihood of new COVID-19 relief measures with the new administration and Democratic control of Congress as reasons for high hopes for the balance of 2021.

 

Economists expect the average apartment community to remain close to fully-occupied in 2021 with relatively stable rents and stable collections. Investors ended 2020 on a brisk buying clip fueled in part by capital providers remaining more than willing to finance the sector. Hopes that working vaccines against the coronavirus will eventually be distributed have helped offset—so far—the recent jaw-dropping spikes in new infections, hospitalizations and deaths. Hopes that Congress might provide more support to people and business hurt by the pandemic—and emergency assistance passed in December 2020—should make up for the expiration of vital programs in the second half of 2020.

“Multifamily remains a very stable investment with a very stable outlook,” says John Sebree, senior vice president and national director of Marcus & Millichap's Multi Housing Division, working in the firm's Chicago office."

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To see the full article click here.

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CBRE

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Path to Full Recovery in 2021: "CBRE forecasts a return to pre-COVID vacancy levels and a 6% increase in net effective rents next year, with a full market recovery occurring in early 2022. The economic rebound will lead to rising multifamily demand, largely from “unbundling”—certain renters moving out of their parents’ homes or those of friends as job opportunities provide more financial flexibility to live independently. Demand levels in 2021 likely will fall short of pre-COVID peaks in 2018 and 2019 but should rise significantly from 2020.

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Vacancy rates for affordable multifamily housing will remain relatively low in 2021. Unlike in previous recessions, more affordable housing inventory (Class B and C) maintained low vacancy rates and modest rent growth in 2020. Class C properties had higher delinquencies."

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To see the full article and video summarizing the current status of Multi-Family please click here.

 

 

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