Multifamily housing supply may be at 30-year highs, but housing demand in many metro markets remains unquenched.
“We continue to see an overall shortage in total housing being delivered to the market,” Freddie Mac said last month in its Multifamily 2018 Mid-Year Outlook. “While the multifamily market continues to experience elevated levels of new construction, and in some metros has surpassed long-run averages, the total amount of housing falls short in many areas and has done so for the past several years,”
Citing data from the U.S. Census Bureau, the Freddie Mac report notes that multifamily completions in buildings with five units and above rose 11%, while permits rose 2% and starts increased 10% in the first six months of 2018.
Meanwhile, with multifamily property prices increasing 11.6% over the past year, apartments continue to provide “stable and safe returns,” according to the report ‒ despite the moderating fundamentals and rising interest rates that could slow origination growth.
Freddie Mac says it sees multifamily origination volume growth slowing to 3.3% in 2018, compared with estimated growth of about 10% in 2017.