Before vacancy rates reach pre-pandemic levels, there is “Ample Leeway” in the multifamily sector.

In the first half of the year, fewer than 80,000 new households were built, which cooled the market as economic headwinds accelerated.

After a protracted period during which the asset class was experiencing high demand, the third quarter saw a slight decline in demand for multifamily housing as household formation returned to normal and inflation started to affect consumer budgets.

According to a recent Marcus & Millichap analysis, the average effective monthly rent in the United States increased by almost 16 percent in 2021, with certain Sun Belt markets seeing increases of more than 25 percent in just the previous year. But as economic headwinds accelerated, 80,000 fewer households were generated in the first half of the year, depressing the market.

Nevertheless, the research observes that “even with a slower second half, vacancy at midyear leaves ample leeway before rates in most metros approach pre-pandemic levels.” Overall, according to Marcus & Millichap experts, the sector’s future is still promising.
“Despite the 60 basis-point rise in national apartment vacancy during the first half, approximately 20 percent fewer rentals available at midyear across the U.S. compared to year-end 2019,” they claim. “These circumstances and the steep barriers to homeownership support sustained momentum in the apartment sector.”

Over the past two years, the median price of a single-family house has increased by more than 30%, and mortgage rates have reached levels that many customers haven’t experienced in their adult lifetimes. Has a single-family median price. Additionally, according to the firm, “this is widening the affordability gap, or the difference between an average monthly payment on a median priced home and an average rent obligation.” The affordability gap is now more than $1,000 per month, which is roughly three times the size of pre-pandemic norms.

According to the research, “the cost-saving benefits, coupled with lifestyle elements, locational advantages, and flexibility, will sustain apartment demand.”

The SVN Vanguard team can help with your multifamily real estate needs. We can help you find the ideal multifamily property for sale or lease. Interested in discussing a sale-leaseback? Contact us.

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