December 11, 2019, Julia Falcon, HousingWire.com - All indicators thus far show that 2019 will end up being a very solid year for multifamily real estate. Now, a new report from YardiMatrix just adds more fuel to that fire. In 2019, more than 320,000 multifamily units were absorbed into the market, or rented. That absorption was short of the cycle peak of 377,000 in 2016, but 2019 marks the sixth straight year with at least 250,000 units absorbed.
Seattle, Denver and Dallas topped the absorption list, with Washington, D.C., Houston and Austin, Texas also having strong years. “Fundamentally, occupier demand is strong, and rents continue to grow in most segments,” the report said. “Meanwhile, property values are at all-time highs and debt markets are functioning smoothly, with healthy deal flow and few delinquencies.”
YardiMatrix found that the average rent in November went down $3 to $1,473, but rent was still up 3.1% over the same month last year. Since Spring 2018, rent growth has exceeded 3% due to strong demand. In the third quarter this year, multifamily vacancy fell to 3.6%, down 40 basis points from 2018, to the lowest level since 2000, according to a report from CBRE.
And it’s looking like 2020 will be another good year for the multifamily market, as renting is very much on the horizon for some. According to a report from Zumper, 32% of respondents said they don’t believe the American Dream includes homeownership, and 20% said they don’t plan to buy a home in their lifetime.
“Overall demand in all of these markets remains extremely high, and none have extreme winters, so the pattern doesn’t have an obvious explanation,” the report said. “Rents may be affected by new deliveries that tend to come online in the fall. Job growth and in-migration continue to be strong in the Pacific Northwest, so we would expect rent gains to pick up again in the new year.”