Why the Current Housing Recovery will NOT Pose a Risk to Apartment Demand via Axiometrics

Recently, Moody’s Investor Service released a cross-sector impact report titled “US Housing Recovery Poses Challenges to Multifamily Properties Backing CMBS and Apartment REITs”. We flatly disagree with this premise and some of the conclusions by its author Tad Philipp, Director of CMBS Research. He states that apartment construction is accelerating at a time when renter numbers are likely to start decreasing. He also states that the loss of renters to eventual homeownership may not provide long-term sustainability to all of the apartment buildings currently under construction and that the current low homeownership rate of young adults (28%) will move toward the national average of 65%. In a word: hogwash.

Let’s examine some of the economic and demographic factors affecting renter demand and supply.

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