The rise of multi-family housing construction is at a all time 10 year high, with Florida having the most popular metro areas for new apartment building construction, according to the Harvard Joint Center for Housing Studies recent report, America’s Rental Housing: Expanding Options for Diverse and Growing Demand.
The Report reveals why Multi-Family Housing have high returns and great for investors
Demand for rental housing continues to surge, driven by a combination of demographic, economic, and lifecycle trends. As millennials and immigrants form millions of new households, they are increasing the diversity of demand. At the same time, rentership rates among gen-Xers and baby boomers are also rising, changing the traditional profile of the renter population.
RENTAL PROPERTIES ARE PROVIDING STRONG RETURNS FOR DIVERSE INVESTORS
Apartment returns and prices are rising while cap rates are falling
• According to National Council of Real Estate Investment Fiduciaries data, annual returns on apartment properties increased to 12.0 percent in the third quarter of 2015—well above the 9.5 percent rate averaged since 1984.
• Moody’s Commercial Property Price Index for apartments rose by 15.2 percent in the past year, and indicates apartment prices are fully a third higher than their pre-crisis peak. Price appreciation has been substantial in many areas, particularly in Northeastern and West Coast metros as well as Denver, Dallas, Houston, and Austin, according to Real Capital Analytics data.
• Cap rates for investment grade properties declined to just under 5 percent in mid-2015, a level not seen since the peak of the housing bubble.
Rental property ownership is diffuse
• Owners of smaller multifamily rental properties are primarily individuals and trusts, with this group owning 87 percent of rental properties with 2–4 units.
• Among larger properties, the 10 largest investors own only about 6 percent of units in structures with 5 or more units as of 2014.
Among the 100 most populous metro areas, eight of the ten with the highest share of cost-burdened renters are in Florida and California, with the highest share of nearly 62 percent in Miami.
SWET Construction Group
With over 66 years of combined experience and over 42,000 completed units, you can feel confident SWET Construction Group. Our experienced team, advanced knowledge of construction, high quality products, on-site management, turn-key solutions and precise estimation, will deliver the results you’re looking for on budget and on time.