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An aging population, increasing divorce rates, and more young people who haven’t yet moved out of their family homes all contribute to the strong multifamily demand.

Jeff Adler, vice president of Matrix, and Jack Kern, director of research and publications, presented the Yardi Matrix 2019 Multifamily Market Update during the webinar.

“Overall, the multifamily industry is performing well, with strong demand, level new supply, and strong rent growth,” they said during the webinar.

Demographics drive multifamily demands

  • Total housing production is unlikely to catch up to household formation, putting upward pressure on rents and occupancy rates and pressures for rent control, the report says.
  • Economic growth and population continue to move south and west to “intellectual capital nodes within tech hub markets,” they said in the report.
  • For new investments, “it’s a sharpshooter’s game to find the right deal at the right price, and on the operational side, it’s about finding revenue and cost-trimming opportunities to grow your net operating income from your existing assets.”
  • Total renter demand will be two-thirds multifamily and one-third single family.

Predictions are that single-family rent growth will continue to exceed that of multifamily, they added in the report. However, as home values continue to rise, the cost of home ownership is growing faster than multifamily rents.

Growth of apartment supply

In looking at the supply of new multifamily units coming, Adler and Kern said national supply growth is expected to remain level with 2018 deliveries for the next few years.

  • At the market level, gateway and tech hub markets have had the most deliveries in 2019.
  • “Our analysis of construction durations showed recent improvement in duration in most markets after several years of increasing construction timelines.”
  • “Despite a large number of deliveries, Dallas, Seattle and Austin had strong absorption of new units, while most other markets struggled.”
  • “Our new supply forecast shows Dallas, Seattle and Denver topping the list for the most deliveries expected between 2019 and 2022; however the new supply will be focused in different submarkets, making the future supply-demand picture for these markets look less grim,” they said in the report.

Takeaways from new rent-control legislation

The webinar report also covered the political side of the affordability crisis in housing.

The summary and takeaways for California and Oregon markets were:

  • They are livable for now, if you are already in the market;
  • On the investment side, the question is: What is your exit strategy?
  • The value-add trade will become less feasible;
  • There’s a slow grind of capital out of California; and
  • Less capital is likely to enter Oregon.


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