Through the roof: recessionary trends have bolstered the multi-family market.

AuthorStewart, Heather
PositionBusiness Trends

Real estate has been among the hardest hit--and the slowest to recover--of the industries impacted by the Great Recession. But one side effect of the hobbled housing market was a strengthening of the apartment market as shell-shocked homeowners fled into rentals.

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"The multi-family market weathered the storm really better than most markets," says Craig Burton, a principal with Apartment Realty Advisors (ARA). And as the economy improves, the market seems primed to continue its growth trajectory.

"The market has recovered and has recovered nicely," he says. "We don't see precipitous growth, but a continuation of steady improvement."

A Rental Lifestyle

The high foreclosure rate for single-family homes is one of the biggest factors that has increased demand for multi-family units. But the multi-family segment also got a strong boost from a convergence of several recent trends.

Greg Ratliff, vice president of the NAI West Apartment Properties Group, notes that young people face a different world when it comes to home ownership. Many are daunted by the minimum credit score requirements that banks are now demanding for mortgage approvals. Add to that a large student loan burden and the difficulty of amassing a down payment, and homeownership can seem unattainable.

Beyond those hurdles, the younger generation has a different perception about home ownership. They witnessed the peak of the housing market frenzy--and the fallout from the crash. Many saw their parents' homes lose value, even go underwater. They ask, "Why should we get on that train wreck?" says Ratliff.

He also notes that "apartment living is becoming far more acceptable than it was 10 years ago." Class A apartment buildings offer amenities that would not be affordable when purchasing a single-family home. New developments boast of granite countertops, ceramic tiles, high ceilings, fitness and recreation centers, and swimming pools--things that would make a home out of reach for a first-time homebuyer.

It's more than the recession that has people turning to rentals, says Burton. "They become this lifestyle renter that has really developed over the past three to four years." The rental lifestyle offers the flexibility to move at will, no home maintenance or yard work, the convenience of urban living and, often, access to transit.

These trends are reflected in the data. "In Utah, the number of homeowners has been about 10 percent higher than nationally," says...

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