Rent Growth and occupancy levels reached historic highs in 2015, leaving multifamily execs eager for another great year. The concern, though, is how long this period of bliss will last.
Julie Brawn-Whitesides, the executive vice president of property management at The ConAm Group says that cycles are typical, and that in her market, she’s used to traveling alongside the bell curve. However, this is one of the longest cycles yet, and if strong fundamentals are met with strong job growth, the lower rate of homeownership is continued, this cycle may be extended even further.
One thing that could inhibit rent growth in 2016 is consumer tolerance. Wage growth is being trumped by rent growth at a rate of nearly 30% which is indicative of financial stress on the renter. One factor that could even the playing field is economic growth. If the economy keeps adding jobs, there could be an upward push on wages.
Projections for 2016 and Beyond
Ric Campo, CEO of Camden Property Trust, calls the challenged Houston market home. Despite the market that he faces, he is all about positivity for the 2016 outlook.
MFP Research is also projecting positive growth this year. Rent growth is being projected at 4.3% which is a drop from last year’s highs, but it is still well above the historical average of 2.5-3%. This general ‘slowdown’ could mean trouble in the years to come. It is accepted that this lull could indicate that the above-average growth that the industry has been experiencing over the last year won’t last much longer.
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