Multifamily Assets

Investors you are only 68 days away from 1/1/2014. 2014 is upon us!

Have you made you investment resolution?

As an investor it is important to understand your asset class market and make investment plans before you start buying or selling based on where you market sits. Markets are in a constant state of flux and investors need to know where the market for their respective asset classes are trending so that they can make the best decision on how to participate based on their risk-reward investment criteria.

Today we will discuss the multifamily asset class and put it into the context of what is happening in the asset class from a strengths, weakness, and recent market trend perspective and recommend a couple of ways to play the asset class for the upcoming fiscal year based on my analysis.

Strengths

The multifamily asset class growth has been driven since 2009 by positive demographics- young adult renters, shadow households, foreclosed homeowners, and downsizing baby boomers- that has created significant demand drivers. While on the supply side, the developments had been constrained given lack of risk-on capital markets since 2009 to 2011.

The supply side equation is starting to change given the Niagara of capital flowing into the apartment sector since 2012 which has, in turn, driven cap rates on existing assets nationwide below 6 and is providing more risk-on capital for apartment developers to bring up new supply into markets. The supply side on a nationwide basis is still going to be under control given that nearly 300,000 new units are needed per year to compensate for population growth and units being functionally obsolete. According to Fannie Mae, the multifamily sector is projected to experience …read more