Good Job
The tables are turning between for-rent and for-sale.
Employment gains so far this year are a tortoise-and-hare story. Growth in jobs is not exactly fast–138,000 new jobs in April for an average of 164,000 per month over the last year, according to the U.S. Bureau of Labor Statistics. (The total workforce in January was just under 135 million.)
But the growth is steady and, as with the tortoise and the hare, slow and steady may well win the race for the multifamily industry. “If we can continue to get employment growth averaging 150,000 to 200,000 new jobs per month, the apartment market will be on strong footing,” says Mark Obrinsky, chief economist and vice president of research for the National Multi Housing Council.
The rental market is likely to be the biggest beneficiary after several years that favored the for-sale side. “The 2001 recession was very hard on the rental business,” says Ron Terwilliger, chairman and CEO of Trammell Crow Residen-tial. “It was a perfect storm: People [were] moving out to buy homes because of low interest rates, and at the same time you had no job creation or negative job creation.”
Now, Terwilliger anticipates that the rental sector will be in the driver’s seat: “We expect the rental housing industry is going to have a good couple of years, with good job creation and a softening homeownership market.” Already occupancy is close to 96 percent nationally, according to real estate research firm M|PF YieldStar.
Industry watchers predict rising occupancy and rental rates, because rents have to catch up to construction costs before new product gets built in many markets, says David Baird, national director of multifamily properties for Sperry Van Ness in Irvine, Calif. Rising costs for construction materials have made new development problematic.
–Nichola Zaklan