Research in multifamily real estate trends has shown that the market is poised to remain stable after experiencing significant growth. Continue reading to learn what affects these national projections and how they can locally impact your multifamily property.
What is the Multifamily Market?
The multifamily real estate market encompasses properties in which multiple residential housing units are contained within a single building or several buildings within one complex. This can include condominiums, apartment buildings, and townhouses. Frequently, multifamily homes are rented by the property owner to tenants through a lease contract.
Who Does the Multifamily Real Estate Market Serve
When thinking about multifamily real estate market trends, you may be wondering if the population that this market serves has changed. Overall, who the multifamily real estate market serves is largely the same, as people of all walks of life, locations, and socioeconomic backgrounds look for multifamily housing for a variety of reasons. Some people are just starting out, some are unable to afford a single-family home, and some like the convenience of it. The reasons are endless but personal for those choosing to live in a multifamily real estate property.
Additionally, as inflation impacts the costs of daily living, more people may find themselves in the position to rent instead of buy when it comes to real estate property, adding more people to the multifamily real estate pool. With that said, the multifamily real estate market currently takes up roughly 42 percent of the total real estate market. Taking a look at your local area will give you a better idea of the market conditions that you will see.
What Impacts Multifamily Real Estate Trends
As with any sector in real estate, multifamily real estate trends are largely influenced by supply and demand with the availability of renters and buyers and the availability of properties. However, the economy, rental prices, and the job market all have an impact on multifamily real estate market trends. National trends are just that; it is also important to look at what’s going on locally.
Availability of Renters and Buyers
The number of people seeking a property type will impact the market. Additionally, changing demographics can also dictate trends, especially as generations retire and look for other housing options. For example, if more people than properties are looking, prices of multifamily properties will rise, and this can impact both rental rates and purchase prices.
Availability of Multifamily Properties
Similarly, if a developer decides to increase the supply of multifamily properties, the supply and demand will adjust accordingly. A surge in properties will make properties more affordable; conversely, if there is a dip in available properties, there is more demand, and prices will go up.
Economic Health
Outside of supply and demand, the external impact of the economy can affect multifamily real estate trends. There may be ample supply and a community of people who want to purchase or rent, but affordability may be holding them back. The economy and cost of living can and do affect real estate trends.
Construction and the supply chain are largely impacted by the economy, and this translates into impacts on the real estate market. While there have still been significant issues with supply and high construction costs as a result, experts hope that this will begin leveling off.
Rental Prices and Interest Rates
High interest rates will impact those who intended to buy a single-family home but cannot afford the high interest rate. This will keep more people in the renter pool and can drive up rental rates. When single-family home prices are high, rental prices often mirror that inflation.
Job Market
Real estate experts will often note that there is a strong correlation between job availability and multifamily housing. Where there is a strong supply of housing, a strong job market will often follow. Though this isn’t the letter of the law, the correlation is strong enough that it is factored by real estate gurus and experts.
Current Multifamily Real Estate Trends
COVID significantly impacted the real estate market, as it did with virtually all aspects of life. There has been some stability and recovery since then when it comes to multifamily real estate trends. Rental prices remain elevated despite the number of properties available, leveling out with new construction. However, this is expected to bring prices down in 2024, improving affordability for renters. Vacancies are expected to remain low with the CBRE calling for above 94% occupancy rates for multifamily property owners. Overall, the market is poised to be a positive one for 2024.
What’s in Demand
Now more than ever, renters and those seeking to purchase multifamily units are looking for places that offer amenities. This shift has occurred as more people work from home and expect more for their money. Additionally, renters are looking for flexible payment options and lease terms. Those who are hoping to buy a home in the future may find themselves in a position to rent until the right property comes along. These are key items that renters are looking for in a multifamily real estate rental.
New Construction
New construction impacts the availability of properties, which in turn affects supply and demand. Is the area where your properties are located booming with new construction, or is it a bust? These things can impact not only pricing but availability of your rental or multifamily unit for sale. Though national trends are largely indicative of the big picture, you will want to assess local construction trends to best understand your local market.
Marketing
Let’s face it, regardless of what the multifamily real estate trends are doing, how you market your multifamily property matters. While today’s market looks to be in good shape, no one knows what the future holds. However, with a solid marketing plan, you can position yourself to keep the cash flowing when it comes to your multifamily community.
Market Your Multifamily Community
Do you have a multifamily community and want to secure your investment from any negative impact from fluctuating multifamily real estate trends? Make sure you’re marketing your multifamily community the right way. Contact us today to see how you can improve your bottom line with better multifamily marketing!
