Reis in the News
By Daniel Palmer
Source: Scotsman Guide – Make the Old New Again
Millennial-age renters are driving much of today’s demand for apartments, and millennials have made their preferences clear. They want to live in trendy neighborhoods close to where they work. They want the latest amenities, but their rents also need to be affordable.
This bodes well for the value-add apartment market in which investors buy older multifamily- housing properties and renovate them with an eye toward raising their value and income. Get to know this market well. Chances are, more multifamily deals will involve value-add properties over the next few years. Commercial mortgage brokers continue to stay busy in a strong multifamily market driven by millennial- generation renters. Although older millennials have started buying single-family homes, the data suggests that, overall, millennials still favor renting over buying.
At the end of 2018, for example, the homeownership rate for people under the age of 35 was 36.5%, nearly 7 percentage points lower than the peak of 43.3% in 2004, according to the U.S. Census Bureau. The homeownership rate for this younger generation has ticked up since bottoming out in 2015 and 2016, suggesting that older millennials are buying more homes, but renting clearly remains the preference of younger people.
The multifamily market’s key fundamentals — such as rents, occupancy levels and asset prices — remained stable during the first quarter of 2019 despite concerns over a pending economic downturn, according to market- tracking company Reis Inc. Although this is great news for mortgage brokers who work with multifamily housing, it’s important to keep an eye on profitable niches within the market. One such area is the market for value-add properties — which are typically older properties that can be improved so that the rents can be increased.