Press Release (ePRNews.com) - BLOOMFIELD HILLS, Mich. - Sep 02, 2017 - Unemployment is at an 18 year low of 4.2% combined with record stock market highs and a 3% GDP.
The US economy is blasting off, combined with future tax reform, repeal of the Dodd Frank Act and Obama Care.
These are the fundamentals that will drive the multifamily and the overall real estate market.
The following are a few examples that the good times are back again.
In Phoenix, the sun has always been a big draw. But today, at least as it concerns the local economy and the multifamily industry, the big draw is jobs.
The city will add about 123,000 jobs in 2017 and 2018. That’s the local market’s ticket for keeping demand above the available supply of multifamily homes.
What’s even better, the well-paying high-tech sector is helping to put Phoenix on the map. It now accounts for about 5.5 percent of employment
More jobs mean a growing population. Phoenix has a population of 4.7 million. It should increase 2.3 percent on average per year through 2020. That’s three times the national rate of 0.8 percent.
Phoenix also boasts a particularly favorable demographic profile for apartment rentals. Millennials make up about 21 percent of the population. This age cohort is growing in Phoenix at five times the national rate. Over the next five years, it will expand further. That bodes well for future demand for multifamily properties.
Rents grew at an estimated 4.5 percent in Phoenix last year. They were growing at an estimated 0.25 percent during the fourth quarter. This dramatic slowdown from earlier in the year was most likely due to seasonal factors. But the amount of new supply coming online was also a factor.
Over the coming 18 months, the projection is for an estimated 2.5 percent average growth in asking rents. That looks like a return to more normal times for rents.
It’s all but impossible to ignore tourism in Orlando, FL. The city has recorded a record volume of tourists for five years straight. Last year, there were about 66 million visitors.
People are also coming to Orlando to stay. Last year, its population grew by 3.0 percent – significantly better than the national growth rate.
Many of Orlando’s new inhabitants were following the job market. The area added 50,000 jobs in 2016 – growing 4.5 percent.
Orlando suffered from the Great Recession. But it has now clearly turned its back on hard economic times. About 8,000 multifamily rental units are underway. There should be sufficient demand to absorb the surge. Economic expansion and pent-up household formations are driving the demand for apartment rentals.
In the meantime, Orlando’s outlook for apartment rentals looks sound over the next several years. The area’s asking rents grew 0.25 percent in the fourth quarter of 2016.
The Cincinnati metro continues to catch up from job losses during the recession. But its moderate job growth, along with limited amounts of new apartment supply should restore apartment vacancies and rents to pre-recession levels.
As of December 2016, the job market was expanding by 1.6 percent annually, year over year. Companies are taking advantage of Cincinnati’s lower cost of doing business. It is 3 percent lower than the national rate.
In the meantime, Cincinnati’s population was growing at a middling rate of 0.5 percent in last year’s fourth quarter.
Most households in Orange County, CA, can’t shoulder the local cost of homeownership. At the start of 2017, the median-priced single-family home in the area was $635,000. That works to the advantage of long-term demand for multifamily rentals.
There have been more than 13,700 apartment unit completions in Orange County since 2012. Another 7,600 are underway. What’s in the pipeline probably won’t be enough to satisfy future demand.
Overall, Orange County should continue to be one of the better performing markets in the country. Vacancies there are tight, and rent-growth above average. Asking rents grew 1 percent in the fourth quarter of 2016.
This article was prepared by Winston Rowe & Associates.
They are publishers of Free eBooks and provide financing for a wide variety of commercial real estate
You can contact them at 248-246-2243 or visit them online at http://www.winstonrowe.com Source :
Winston Rowe & Associates