The multifamily housing industry has been booming since 2020. Covid, followed by economic uncertainty and new flexibility in where and how Americans live, has led to more people renting in multifamily units for longer. But, will this period of growth change at all in 2023? Let’s take a look at this year’s trends in multifamily housing.
Multifamily Industry News
To clarify, multifamily housing encompasses more than just apartments, with duplexes, row homes or townhouses, triplexes, and dorms all falling under the multifamily umbrella. Investment in property within this sector of the market has grown for several years, and the multifamily industry alone represented 42% of all the money made in US real estate in 2021.
While the buy-sell housing market continues to slow in 2023, after inflation and rising interest rates began to bite in the final quarter of 2022, the multifamily market is expected to see healthy growth by the end of 2023, according to Freddie Mac.
Why the Multifamily Industry Is Growing
With an average 20% rise in house prices over the last year, many would-be homeowners are continuing to rent. And, even though rental prices rose by around 10% in 2022, occupancy rates remain high in both large and small metro areas.
The hard truth for Gen Z and Millenials is that renting is often necessary. They simply can’t afford to buy homes. Given that older Millennials are now in their 40s, this reality should not be taken lightly.
But, that’s not the only reason younger people continue to rent, buoying the multifamily industry year-over-year. A rise in “lifestyle renting” is well underway; in other words, renting because it just makes more sense for affluent Millennials and Gen Z consumers choosing a different path than their parents and grandparents. With busy work and social lives, younger people want to live close to city centers, to gain access to amenities, to move whenever they want or need to, and to call a landlord or property manager to deal with property issues when they arise. Many young couples who may have moved to the suburbs in the past, for example, simply don’t want to anymore.
How the Multifamily Industry Is Growing
In general, the real estate market tends to follow the larger economic market, and for many months economists have predicted a 2023 recession. However, an economic downturn is always tricky to predict with any certainty, and some recent reports conflict with these predictions, so it’s impossible to foresee precisely what prevised trends in multifamily housing will come to fruition this year.
If we listen to the experts, it appears that rent prices will continue to rise, and house prices will do the same after a brief dip last year. Nevertheless, these rises will happen more slowly than in the 2020-2022 time period. Whether this forecast holds true or not, mortgage rates are now keeping first-time buyers out of the single-family home market. In fact, at the end of 2022, monthly mortgage payments were three-quarters higher than in early 2021. Whether younger people can afford to buy or not, it simply doesn’t look like an enticing option in 2023.
Of course, this economic milieu will cause more growth in the multifamily industry as more of Gen Z leaves home and begins renting, and Millennials refrain from purchasing homes. This situation will be a boon to investors, property managers, and apartment locators, who will continue to profit from the industry in 2023.
That being said, both ‘lifestyle renters’ and Millennials unable to get a toe on the property ladder tend to know what they want, be aware of average rental prices, and be picky about where they live and the amenities they get to enjoy. After all, they’re more than aware that they’re either choosing to rent or have years of experience getting the most out of renting and insist on bang for their buck. In 2023, renters will continue to insist on office space, outdoor space, and security in the inner-city locations where most of them choose to live. So, while there are plenty of exciting opportunities to build a career in the multifamily industry, it is by no means an easy career choice.
Work in the Multifamily Industry as an Apartment Locator
Finding people the perfect home is ever more of a challenge now that we’re all spending more time in them, and yet it’s also ever more rewarding. With savvy renters, going above and beyond to find someone an apartment they’ll love is a challenge many apartment locators relish. If that sounds like it could be you, get in touch with us at AptAmigo. We’re always looking to expand our team of expert apartment locators, especially as these positive trends in multifamily housing continue to unfold.
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