MZ Capital Partners

Emerging Trends in Real Estate (2016) report of the Urban Land Institute

mzcapital — Sun, 27 Nov 2016 21:56:06 +0000

According to the Emerging Trends in Real Estate (2016) report of the Urban Land Institute:

The upper end of the multifamily housing market is saturated with product, sometimes selling at ridiculously low cap rates.

There is substantial opportunity to provide rental housing to “the excluded middle”. Millions of households, priced out of expensive Class A rentals, need housing in the middle-income range.

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Demographic Trends Favoring MZ Capital Partners Targeted Property Class Niche

mzcapital — Wed, 09 Nov 2016 17:55:30 +0000

While many adult Americans continue to desire to own a home, for millions of aspiring homeowners, owning is not an option due to income qualification, home pricing, and restricted mortgage loan accessibility

Millennials (a key renter age cohort) make up 75 % of the American workforce

The trend toward postponed marriage (today the average age at first marriage is the oldest in history), delayed childbearing, and rising divorce has increased the number of renter households

Seniors are increasingly downsizing by selling their houses and choosing to rent

Homeownership rates in the US are at the lowest level since 1967

Occupancy rates and rental growth are higher in Class B middle tier rentals than in Class A product

New under construction multifamily product, due to today’s high land and construction costs, must be positioned as high end Class A product in order to achieve the high rents required for a return on investment

Nationally, stabilized middle tier (Class B) multifamily properties have been achieving higher occupancy levels that newer Class A assets since September, 2015.

There is substantial pent up demand for mid tier apartments in addition to the needs of those renters currently in the market: the level of 18-34 year olds living in a parental home is now 3.7 million over the long term average. As unemployment rates remain low, these “living in the basement kids” will enter the rental market.

Confirming the soundness of multifamily real estate investment, Fannie Mae and Freddie Mac’s serious delinquency rate (60 days or more past due) on multifamily loans are at historically low levels and are near zero at .06 and .04 percent respectively.

Through mid 2016, US Multifamily rent growth remains above historical averages at 4 %.

Lower price point mid-tier rentals and Suburban assets continue to skirt the impact of heavy new supply in more expensive CBD submarkets in major MSAs.

New under construction multifamily product, due to today’s high land and construction costs, must be positioned as high end Class A product in order to achieve the high rents required for a return on investment.

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Joint Center for Housing Studies of Harvard University 2016 State of the Nation’s Housing Report

mzcapital — Thu, 03 Nov 2016 21:55:00 +0000

According to the Joint Center for Housing Studies of Harvard University 2016 State of the Nation’s Housing Report:

Rental demand for housing should remain strong for at least the next decade.

In total about 36 percent of US households live in rentals representing nearly 110 million people.

The inability of supply to keep pace with the rapid rise in demand has led to the longest period of rental market tightening since the late 1960s. Starting in late 2010, the national rental vacancy rate fell for five consecutive years.

The number of renters increased by over 9 million over the past decade, the largest 10-year gain on record.

The pace of Household growth is on the rise. Over the next 10 years, the millennial generation (born 1985-2004) is expected to form 2 million new households per year, increasing the total number of millennial-headed households from 16 million in 2015 to a projected 40 million in 2025.

In 18 of the nation’s 25 largest markets, annual rent increases in middle tier (Class B assets) outstripped those in the upper tier (Class A assets).

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