Home ownership, which has already dropped 2.7 percent since the start of the current housing crisis, is expected to decline another 1 to 2 percentage points if the current slow recovery continues. This is one conclusion reached by Freddie Mac's Multifamily Research Group in its market demand forecast for the next three years that was released on Monday.
The multifamily housing market defined as buildings with over five units weakened somewhat during the recession but not to the same extent as the single family market and directly benefitted from the decline in the homeownership rate. The shift of households from homeownership to renters increased the demand for rental units and rents have increased (about 4.9 percent in 2011) while vacancies dropped from over 7.3 percent in 2009 about 5 percent today. Supply remains low with only 167,000 construction starts in the sector last year, far below the average volume of 260,000 units in 2001-2010.
It is unclear how long favorable conditions will last. There is more construction on the way, it is always possible that improving conditions will swing the pendulum back in favor of homeownership, and a significant conversion of single-family houses to rental properties could also impact demand.
Read more...Freddie Mac sees Continued Healthy Multi-family Market via MortgageNewsDaily.com
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