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Multifamily Industry to Remain Strong Through 2013

By on Jan 25

Atlanta multifamily housingDuring a press conference at the 2013 National Association of Home Builders (NAHB)

International Builders’ Show (IBS), panelists maintained the position that the multifamily housing sector has helped lead the recovery of the overall housing market and they confirmed that it will continue to do so over the course of the next few years. The sector, which has recovered substantially since 2010, is now almost 70 percent of the way back to a sustainable level.

“Last year was a banner year for the multifamily market, and our baseline forecast calls for further steady growth in the rate of multifamily production,” said NAHB Chief Economist David Crowe. “We are forecasting construction of 299,000 new multifamily residences in 2013. While this is an improvement from just a few years ago, it is still well below the 350,000 units that are required to keep supply and demand in balance.”

While many are predicting a continued increase in multifamily production, developers see several barriers to a full recovery. “A lack of capital is restraining the ability of developers in many markets across the country from being able to build apartment communities for residents of all income levels,” said Michael Costa, president and CEO of Highridge Costa Housing Partner LLC in Gardena, Calif. “Additionally, we are being faced with increases in the cost of building materials and construction labor, which makes it infeasible to build in certain circumstances.”

However, there is still room for optimism. “The market continues to improve as new household formations generate demand, especially in the market-rate rental segment,” said Lance Swank, president of The Sterling Group in Mishawaka, Ind. “There is also a change in attitude toward renting–people like the flexibility it gives and the option to be able to easily move to another city or state for a job opportunity.”

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