Outlook Kim Betancourt, Fannie Mae Jay Lybik, Institutional - - PowerPoint PPT Presentation

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Aug 06, 2023 281 likes •404 views

Digging Deeper: The Multifamily Market Outlook Kim Betancourt, Fannie Mae Jay Lybik, Institutional Property Advisors Greg Willett, RealPage Mark Obrinsky, NMHC, moderator 2019 @ApartmentWire 2019 @ApartmentWire #NMHCstrategies

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@ApartmentWire #NMHCstrategies

2019

@ApartmentWire #NMHCstrategies

2019

Digging Deeper: The Multifamily Market Outlook

Kim Betancourt, Fannie Mae Jay Lybik, Institutional Property Advisors Greg Willett, RealPage Mark Obrinsky, NMHC, moderator

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@ApartmentWire #NMHCstrategies

2019

Nonfarm Payrolls Still Solid

(3-month average, 000s)

1,000
800
600
400
200

200 400 600 1990 1994 1998 2002 2006 2010 2014 2018

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@ApartmentWire #NMHCstrategies

2019

Seismic Shift In Household Composition, (millions)

10 20 30 40 Married, Kids Married, No Kids Single Parent Singles Other 1968 2018

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@ApartmentWire #NMHCstrategies

2019

Housing Completions (millions)

0.0 0.5 1.0 1.5 2.0 2.5 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016

Single-family Multifamily

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@ApartmentWire #NMHCstrategies

2019

U.S. Apartment Vacancy by Class

3% 5% 7% 9% 11%

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19*

Class A Class B Class C Vacancy Rate

3.9% 4.7% 5.8%

* Forecast Sources: IPA Research Services, RealPage, Inc.

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@ApartmentWire #NMHCstrategies

2019

Supply and Demand Trends by Cycle

* Forecast Sources: IPA Research Services, RealPage, Inc.

70 140 210 280 1994-2000 2002-2008 2010-2019* Absorption Completions Units (000s)

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2019

Resident retention when initial leases expire is at an all-time high

48% 49% 50% 51% 52% 53% 2010 2011 2012 2013 2014 2015 2016 2017 2018

Retention is higher in Class C units (54%) than in the Class B (51%) or Class A (48%) stocks. Metro-level retention leaders are Milwaukee, Newark-Jersey City, Providence, Miami and St. Louis. Metro-level retention laggards are Salt Lake City, San Antonio, San Diego, Charlotte and Phoenix.

Source: RealPage, Inc.

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@ApartmentWire #NMHCstrategies

2019

Rent growth has accelerated a little overall, notably in select markets

Source: RealPage, Inc.

Metro Rent Growth Momentum 2018 Rent Growth 2017 Rent Growth Austin 490 bps 4.2%

0.7%

Pittsburgh 390 bps 4.2% 0.3% Phoenix 350 bps 7.4% 3.9% West Palm Beach 330 bps 3.8% 0.5% San Francisco 290 bps 4.3% 1.4% Fort Lauderdale 280 bps 3.8% 1.0% Memphis 260 bps 4.7% 2.1% Nashville 230 bps 2.6% 0.3% Raleigh-Durham 200 bps 3.8% 1.8% Atlanta 190 bps 4.8% 2.9%

Neighborhoods heavy on Class B stock drove the overall upturn in the rent growth pace in almost every instance.

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@ApartmentWire #NMHCstrategies

2019

National Apartment Rank by Metro 2019 Completions*

* Forecast Bay Area includes San Francisco, San Jose, and Oakland; South Florida includes Fort Lauderdale, Miami, and West Palm Beach Sources: IPA Research Services, RealPage, Inc.

Bottom 10 Metros 2019 Completions* Completions as % of Inv. Cincinnati 1,200 0.7%

St. Louis

1,400 0.9% Cleveland 1,600 1.0% Sacramento 1,800 1.2% Detroit 2,000 0.7% Baltimore 2,100 0.9% Jacksonville 2,600 2.2% Indianapolis 2,700 1.6% Inland Empire 2,700 1.4% Las Vegas 2,900 1.3% U.S. Total 315,000 1.8% Top 10 Metros 2019 Completions* Completions as % of Inv. Dallas-Fort Worth 28,400 3.5% New York 20,000 1.2% Los Angeles 14,800 1.3% Washington, D.C. 14,400 2.3% Denver 14,100 4.8% Bay Area 13,700 2.2% Seattle-Tacoma 12,200 3.1% South Florida 11,600 1.9% Atlanta 10,700 2.1% Phoenix 10,600 3.0% U.S. Total 315,000 1.8%

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2019

National Apartment Rank by Metro 2019 Absorption*

* Forecast Bay Area includes San Francisco, San Jose, and Oakland; South Florida includes Fort Lauderdale, Miami, and West Palm Beach Sources: IPA Research Services, RealPage, Inc.

Bottom 10 Metros 2019 Absorption* Absorption as % of Inv. Detroit 1,100 3.8% Sacramento 1,500 5.7%

St. Louis

1,500 2.5% Cincinnati 1,800 3.1% Cleveland 1,800 3.1% Inland Empire 2,300 5.1% San Diego 2,800 4.3% Jacksonville 2,800 5.7% Salt Lake City 3,000 4.9% Baltimore 3,100 2.2% U.S. Total 283,000 1.6% Top 10 Metros 2019 Absorption* Absorption as % of Inv. Dallas-Fort Worth 23,500 2.9% New York 19,600 1.2% Denver 14,500 4.9% Washington, D.C. 12,500 2.0% Atlanta 12,200 2.4% Bay Area 12,000 1.9% South Florida 10,700 1.8% Phoenix 9,400 2.7% Seattle-Tacoma 9,200 2.3% Northern New Jersey 8,900 2.6% U.S. Total 283,000 1.6%

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2019

Anticipated rent growth by market ranges from about 2% to about 6%

Source: RealPage, Inc.

Metro 2019 Forecast Rent Growth Phoenix 5.4% San Diego 4.2% Tampa 4.0% Atlanta 3.9% San Francisco 3.7% Miami 3.7% Metro 2019 Forecast Rent Growth Charlotte 3.3% Los Angeles 3.2% Minneapolis 3.1% Columbus 3.0% Denver 2.9% Detroit 2.9% Metro 2019 Forecast Rent Growth New York 2.5% San Antonio 2.5% Washington, DC 2.5% Dallas 2.2% Chicago 2.0% Seattle 1.9%

Expected Outperformers Expected Average Performers Expected Underperformers Class B properties should continue to lead the way in terms of pricing power. Class C properties, while full, are losing pricing momentum in some metros due to affordability constraints. Class A properties should lag other product sectors on rent growth.