MiamiRealEstateKing

Multifamily rentals: NAHB sees rising demand, insufficient supply

In real estate on January 13, 2011 at 5:22 pm

ORLANDO, Fla. – Jan. 13, 2011 – Post-recession job creation is creating increased demand by new renters for apartments. However, apartment developers are not responding to demand quickly enough due to trouble accessing credit. According to the National Association of Home Builders (NAHB), that will cause rents to increase and a likely shortage of available apartments in the next few years.

“Although we are forecasting construction of 133,000 new multifamily residences in 2011, that is far short of the 250,000 to 300,000 units that would be required to keep supply and demand in balance,” says NAHB Chief Economist David Crowe. “In addition, we have yet to make up for the insufficient number of new apartments that should have been built over the last two years.”

Multifamily developer Bill McLaughlin, an executive vice president of the Avalon Bay Company, a real estate investment trust headquartered in Washington, D.C., said he sees demand for apartments increasing, but notes that the cutback in multifamily development in 2009 and 2010 has resulted in a “woefully inadequate supply” of new multifamily rentals to meet the rising demand.

Private development firms bore the brunt of the constrained supply of capital, but even affordable rental housing is feeling the pressure.

Affordable housing, which is primarily driven by the Low-Income Housing Tax Credit program, is rebounding,” says Robert Greer, president of Michaels Development Company. “Investors are slowly coming back into the market, and deals are getting done … which is good news. But the bad news is that given the depth of the current recession, more people than ever need affordable housing, and the demand far outstrips the supply.”

Reprinted by Permission: © 2011 Florida Realtors®

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