Yesterday, the Harvard Joint Center for Housing Studies (JCHS) released its State of the Nation’s Housing 2016 report, concluding that the overall housing market had recovered despite slow economic growth. The multifamily sector continued to lead the rebound, although single-family was poised to be a strengthening economic contributor going forward.
Demographics were the biggest contributing factor to apartment growth, as rental demand increased across all age groups, income levels and household types. In fact, renters accounted for all of the net growth in households since 2005.
However, the report cited concerns over rent growth and rising property valuations and the effect on rental affordability. While multifamily construction activity is ramping up, a demand-supply imbalance exists. Furthermore, multifamily costs are climbing while the real median renter income is falling.
“Last year, we built over 400,000 new multifamily units, most of them rental,” said Harvard JCHS Director Chris Hebert during a related webcast. “But we had a million new renters. So, for as much as we’ve been building new supply, we’re still struggling to keep up with new renter demand.”