The multifamily sector is expected to continue leading the overall housing market recovery for the next several years, the National Association of Home Builders reported Jan. 22.
The NAHB noted that multifamily housing has shown substantial recovery since late 2010.
“Last year was a banner year for the multifamily market, and our baseline forecast calls for further steady growth in the rate of multifamily production,” David Crowe, NAHB chief economist, said in a news release. “We are forecasting construction of 299,000 new multifamily residences in 2013. While this is an improvement from just a few years ago, it is still well below the 350,000 units that are required to keep supply and demand in balance.”
Lance Swank, president of The Sterling Group, a Mishawaka, Ind.-based real estate developer, said that “the market continues to improve as new household formations generate demand, especially in the market-rate rental segment. There is also a change in attitude toward renting — people like the flexibility it gives and the option to be able to easily move to another city or state for a job opportunity.”
While NAHB noted many signs that pointed to increased new multifamily construction, one developer reported obstacles that could hinder a complete recovery.
“A lack of capital is restraining the ability of developers in many markets across the country from being able to build apartment communities for residents of all income levels,” Michael Costa, president and CEO of Highridge Costa Housing Partners in Gardena, Calif., said in the news release. “Additionally, we are being faced with increases in the cost of building materials and construction labor, which makes it infeasible to build in certain circumstances.”