#1. Vacancies are up — for now
As we wait for data from the second half of the year, the picture could change, but vacancies were flat in the second quarter at 4.7%, and rent growth is expected to decrease relative to 2018.
While vacancy rates are climbing, Calanog predicts 2020 will bring a leveling of supply, and the market will correct itself — so don’t sound the alarm just yet.
National apartment market supply and demand trends
Source: REIS, Real Estate Solutions by Moody’s Analytics; Top 50 Primary Apartment Markets
#2. Millennials will fuel the market for years
Calanog admits we could see an exodus of 35–40-year-old “renters by choice,” who delayed purchasing homes because of fears propagated by the Great Recession. Now with children and changing needs, they’re heading to the suburbs.
Still, with the largest group of people around 28 years old, Calanog forecasts multifamily will be solid for the next five to 10 years.
Demographics by age
Source: U.S. Census Bureau, Population Division
#3. Boomers aren’t quite ready for senior housing
The second largest age group are Boomers around 55 who aren’t quite ready to move into senior housing facilities. People are aging healthier and living longer, so many are opting to remain in homes they own, move in with adult children, or rent apartments that require less maintenance but offer independence.
As a result, vacancy rates for senior housing have continued to climb. However, the market is highly contingent on location (Florida, for example, will see fewer vacancies than New York).
Seniors housing in the second quarter
Source: REIS, Real Estate Solutions by Moody’s Analytics