Multifamily

WASHINGTON, D.C. — Confidence in the market for new multifamily housing development notably declined in the third quarter of 2022, according to results from a survey of 63 multifamily builders conducted by the National Association of Home Builders (NAHB), which is based in Washington, D.C. The survey is conducted quarterly and produces two separate indices — new multifamily production and multifamily rental occupancy in the current versus preceding quarter. “Although demand for multifamily housing remains strong in many parts of the country, some multifamily developers are starting to see signs of a slowdown,” says Sean Kelly, chairman of NAHB’s Multifamily Council. “The ongoing problems of scarcity and high cost of land and materials are making it difficult to go forward with certain projects, particularly affordable housing projects.” Confidence in Multifamily Production Decreases The Multifamily Production Index (MPI) measures builder and developer sentiments regarding current production conditions in the market — including the construction of affordable housing units, market-rate units, and for-sale units or condominiums — on a scale of 0 to 100. A number below 50 indicates that more respondents reported that conditions in the market are worsening than reported conditions are improving. All three components of the MPI saw …

After years of strong growth in property values and rental rates, momentum in the housing market is beginning to slow. Growth is stagnating across the country, and values in some markets are slipping. This shift has caused some investors to hold off on acquiring additional real estate holdings as we go into 2023. However, some multifamily investors are seeking unconventional opportunities to ensure annualized returns, such as co-living models. The Rise of Co-Living According to iPropertyManagement, an online informational database which provides resources for landlords, the average rent price nationwide has increased 8.85 percent per year since 1980, consistently outpacing wage growth and creating financial strain for renters. To make rent more affordable, more renters are opting for co-living, splitting the rent with multiple roommates in larger apartments. These renters quickly run into a few problems, however. First, most rentals offer only one or two bedrooms. In fact, around 65 percent of the nationwide apartment inventory has two bedrooms or fewer, according to a 2020 study conducted by Harvard University on rental housing. With the high cost of two-bedroom units, splitting the rent with only one other roommate may not reduce the per person rent to an affordable rate. The …