Did you know that at the same time many renters navigate a housing market with limited affordable options, new apartment development continues to be held back by World War II-era zoning restrictions? In many localities, regulations introduced in the mid-1940s have choked the multifamily pipeline for decades, creating a “missing middle” that leaves low-income renters in a lurch.
Increasingly, single-family rental (SFR) operators have been relying on build-to-rent (BTR) development to bridge the housing gap, accelerating the momentum of SFR construction through 2024’s halfway point. Both total SFR/BTR housing starts and BTR’s share of all single-family housing starts reached new record highs in the second quarter, setting the stage for another banner year.
The small multifamily outlook continues to brighten as more signs indicate a normalization has already begun. In the second quarter, originations activity and borrowing conditions improved as completions sat at a five-decade high, Arbor’s Small Multifamily Investment Trends Report Q3 2024, developed in partnership with Chandan Economics, shows. While the subsector’s fundamentals are trending up, it still has room for growth when interest rate relief arrives.
While the overall pace of new multifamily permitting per capita in the U.S. slowed recently, it has picked up momentum in pockets of the country, especially the Midwest. In the first two quarters of 2024, Madison, WI, Columbus, OH, and Omaha, NE, were among the major metropolitan markets posting solid permitting gains, another sign of multifamily’s strength in all cycles.
The U.S. multifamily market followed the quick pandemic contraction with a strong recovery, and has now normalized into a more stable cycle. Demand remained strong across the country, with a wide variety of markets among the leaders for rent growth.
Did you know that more U.S. renters now spend over 30% of their income on housing and utilities than at any other time on record? Limited affordable housing options not only increase the rent burdens of low-income tenants but disrupt physical and mental health, underscoring the need for the creation and preservation of more affordable housing units nationwide. Quality affordable housing adds stability to communities and supports healthier environments that can significantly improve well-being.
After skyrocketing through a boom cycle over the past two years, the U.S. multifamily market settled into a cycle of stabilization in the first half of 2024. Rents held steady, occupancy increased, and vacancy rates remained in line with historical averages, while investor sentiment remained positive.
Single-family rental (SFR) CMBS issuance saw a sizeable pickup through the first half of 2024, with $4.2 billion in new issuance, placing it on pace to at least triple last year’s annual total.
As the U.S. commercial real estate market continued its recovery from the COVID-19 pandemic-related recession in 2021, the multifamily and single-family rental sectors proved their resilience. Throughout the year we continued to provide unique research and insights into these markets. Here’s a look at our top Arbor Chatter posts from 2021, in case you missed them.
After struggling through the first half of the year, the U.S. multifamily market burst through in the third quarter of 2021. Moody’s Analytics REIS reported that effective rent growth climbed 7.9% year-over-year, up from -1.6% for the second quarter. The vacancy rate improved to 4.7%, down from 5.3% in the previous quarter.
Multifamily rent growth for the U.S. overall was up 7.9% year-over-year during the third quarter of 2021, as Sun Belt markets continued to drive the recovery.
Las Vegas remained one of the nation’s top multifamily performers in the third quarter of 2021, with among the highest rent growth among large markets. After a brief pause at the onset of the pandemic, investors once again flooded into the market as sales volume neared a pace to reach 2019’s record high. The market also rose to the top of our Arbor-Chandan Large Multifamily Opportunity Matrix in 2021.
The Charlotte multifamily market has consistently been one of the nation’s top performers over the last several years, and that trend continued as the market recovered from the COVID-19 pandemic and recession.
Multifamily rent growth in Memphis was the highest in the nation during 2020, driven by strong demand for workforce housing, as the area remained attractive to investors.
Throughout the year we continued to provide unique research and insights into the multifamily market, while expanding our coverage into the rapidly growing single-family rental sector.