Thursday, January 20, 2011

Builders See Rising Demand in Apartments

One of the findings to emerge from the National Assn. of Home Builder's (NAHB) convention held recently in Florida was the increased demand for rentals, because of the new job creation in a slowly-recovering economy.  However, the lack of credit needed to finance the development of apartments is already causing rents to increase and is likely to lead to a shortage of available apartments in the next few years.

"Although we are forecasting construction of 133,000 new multifamily residences in 2011," said the NAHB chief economist, David Crowe, "that is far short of the 250,000 to 300,000 units that would be required to keep supply and demand in balance. In addition, we have yet to make up for the insufficient number of new apartments that should have been built over the last two years. The capital needed to finance that construction is just not available to apartment developers."

Multifamily developer Bill McLaughlin, of Washington, DC, said he sees demand for apartments increasing, but noted that the cutback in multifamily development in 2009 and 2010 has resulted in a "woefully inadequate supply" of new multifamily rentals to meet the rising demand.

Joe Giancarli, SA
Real Estate Advisor

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