Fannie Mae and the National Association of Home Builders agree that 2013 will be a strong year for the multifamily sector. Low vacancies and higher rents have already been reported, and both groups believe that this sector of the real estate industry will continue to show positive signs of growth this year.
Adds David Crowe, chief economist for the National Association of Home Builders, “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.”
Fannie Mae says they believe asking rental rates will increase 2.5% this year, while vacancy rates will increase to 6%, a number that is in-line with the historical norm. Last year, the multifamily sector ended with a vacancy rate of 5.5% in the fourth quarter, a number that is at the low end of historical data. Additionally, rent growth exceeded Fannie Mae’s projection of 3% coming in at 3.25% at the end of 2012.
According to Fannie Mae, the slight uptick in vacancy at the end of the year is not unusual. Multifamily vacancy levels often trend up in the fourth quarter because this is a time when most people choose not to change residences.
There will be a rise in new construction of multifamily housing, according to Fannie Mae and NAHB, but as 2013 rolls on, they expect the multifamily market to stay balanced. Other industry experts believe there will be some hurdles to overcome, like the lack of available capital that is slowing down developers around the country. Additionally, rising construction costs, including those associated with materials and labor, will play a factor in the multifamily growth in some areas.