Ryan Severino joins Michael to discuss the multifamily property market, including demand, supply, performance, trends, and where good apartment investment opportunities may lie. Highlights of this video include:
- Supply is “certainly at an elevated level”
- 2016 to 2017 appears to be high water mark for construction
- New inventory making market more challenging
- Relative to a few years ago, investors should do more homework
- Lender enthusiasm has cooled off a touch
- Lots of new construction in major markets; 4 or 5 years ago about any new project was a home run, not the case today
- There is a question as to how many people can afford all the premium property coming online
- Even in New YOrk, there isn’t an infinite pool of people that can afford premium product
- Land and construction costs are fueling high price points
- Believes some new premium projects will not hit pro-forma, will miss asking rent levels, “late to the party”
- Boom in likely to rent millennials not at immediate risk as group is still young with three most common ages in USA at 25, 26, and 24
- Median first time home buyer age in 31, indicating a few years before a need to worry about transition out of renting into home ownership
- Supply side is where risk is, not demand
- Believes underpinnings of “for sale” market remain strong
- Believes strength in for sale supply (lack of) supply driven as inventory levels are less than in the housing bubble
- High housing prices benefit multifamily investors due to lack of affordability of purchase options
- Loves all multifamily properties today below institutional radar in multifamily, all B+ and even somewhat further below
- Inventory declining
- demand increasing
- Price points attractive
- Do homework, particularly on capex
- Proper management can make a big difference in NOI and value