Multi-Family housing is rising at rates not seen before in historical records – this is a direct result of both economic and social changes. Millennials are Gen-X’ers are delaying home buying due to being priced out of the market. as well as lifestyle choices that focus less on buying and more on mobility. Developers are rushing in to fill the void by building far more properties as rentals.
How long this trend will continue is without measure as we are in uncharted economic waters now. Rents may continue to rise and themselves create a new form of “bubble” economics as rental-rates replace home-buying as the “new” measure of economic health.
The latest Allen Matkins/UCLA Anderson Commercial Real Estate Survey found multi-family developer certainty has remained strong and consistent over the two years of 2014 and 2015. Amazing fact: San Diego County has historically desired and built single-family homes by a wide margin, but SANDAG forecasts a BIG shift; 82 percent of housing units built until 2050 will be multi-family!
This is a big shift in historical norms and will totally reshape the single family real estate market in the coming years. It’s possible that a long-term reduction in single-family home construction could lead very tight demand for SFR for several years to come. Prices of SFR could become quite insulated against the market simply by a long-term restricted supply.
This is an exciting time for real estate overall, both commercial and residential real estate are positioned with the potential to move prices in any number of directions including up, down and sideways!
Our advice is consistent: Buy now and don’t wait. Commercial real estate will continue to grow and morph itself into the needs of the growing millennial generation and you can’t go wrong buying close to urban centers and near transportation corridors. Pick the best property manager you can find and hold on for the long term.
Horizon Resources Inc 