DEMAND REMAINS HIGH IN THE MULTIFAMILY SECTOR
Written by: Harrison LaHaie
Harrison LaHaie is a student at The Ohio State University studying Economics and History. He is currently interning with Colliers | Columbus on the research team. Keep reading to get Harrison’s take on the multifamily sector’s continued demand.
Multifamily has been a favorite for investors in the past year, and for good reason. As it stands now, there is far too much demand for available housing. As reflected by multifamily housing starts growing by 40% in the last 12 months, there is a desperate need for more housing than currently exists. This overwhelming demand combined with a lack of supply has pushed rental rates higher in the last year. Nationwide rents grew by 15% in 2021. In Columbus, rents grew by a still significant 8%, well beyond the 10-year average of 3.2%. Moving forward, the continued upward pressure on wages due to a slim labor market will allow rents to grow even higher. Significant rises in home prices along with interest rates climbing has made renting preferable to buying, further expanding demand for multifamily housing. The only potential headwind for multifamily is a slowdown of the economy. Opinions on when a recession may come vary within the next two years. However, a recession may only temporarily slow down rent growth, as the mismatch in supply and demand will remain with the U.S. underhoused. Until then, the multifamily market will remain strong.
Sources: First Trust, Wealth Management, Costar, Colliers National Research