Metro Matters: First Quarter 2012 Multifamily Investment Returns Outlook via Red Capital Group

First Quarter Performance Stronger than Expected

RCR forecasting models anticipated faster rent growth and falling vacancy in the first quarter 2012, but not to the degree actually observed in the period. Apartment demand was exceptionally strong during the seasonally-soft winter quarter while supply totals were at another record-low.

During the first quarter, property managers net leased 30,095 apartment units in the 45 markets covered by RCR, approximately twice the number we forecasted in February. Robust job creation was primarily responsible. U.S. payroll headcounts advanced at a 1.5% year-over-year rate in 1Q12, exceeding our forecast by 30 basis points. Likewise, households continued to shift their tenancy preference in favor of rentals as evidenced by the latest homeownership data released by the Census Bureau in April (see Exhibit 1).

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