Another driving force behind the uptick in multifamily investments is consistently high rental demand versus supply. The housing shortage has pushed construction of new housing—multifamily and otherwise—into overdrive, with new units being constructed in suburban and urban areas at a record pace. That said, the new construction is unlikely to put a damper on the ROI for investors in the multifamily market.
Analysts believe the ongoing demand for rental units is likely to keep pace with the new supply, meaning there will be enough demand to go around for investors to maintain healthy occupancy at multifamily properties for the near future. Persistently elevated demand in multifamily markets is the result of a complex confluence of factors, including demographic shifts, low rates of homeownership, zoning regulations, and the underbuilding of non-luxury multifamily properties in working-class areas.
With demand sky-high and housing options constricted, renters are unlikely to see significant relief in the near future. But in the coming years, forward-looking multifamily investors may be able to realize attractive returns while increasing the supply of market-rate housing, ultimately easing costs for renters in an otherwise inflated rental market.
This story originally appeared on EquityMultiple and was produced and distributed in partnership with Stacker Studio.
