Recent data from Axiometrics predict that 2016 is a healthy year for the national apartment market. Although the magnitude of growth will slightly be slower from the robust pace of 2014 and 2015, growth patterns are expected to continue through until at least 2020.
The data showed that in this year, rent growth will amount to 3.8 percent with occupancy averaging at 94.6 percent. However, Axiometrics pointed out that in many markets where rent growth was at exceedingly high levels in the past couple of years will see a slowing down.
Among the factors that will positively affect the apartment market's health include continued moderate national job growth, the growing preference toward renting instead of purchasing a home, the later age of first marriage and childbearing and student loan debt. The increasing delivery of more apartments is also seen to make the apartment market stronger. As a matter of fact, the apartment supply is seen to outpace market demand in 2016.
This might be good news for the national apartment market but Axiometrics' KC Sanjay said that there are two issues that may prevent the apartment market from reaching the forecasted numbers.
First, Sanjay cited that the simultaneous increases in multi-family and single-family may cause apartment developers to slow down on construction. "...If apartment development doesn't pause in 2017 and 2018, the rent-growth and occupancy metrics could soften more than the current forecaset predicts. Also, if the US government decides to assist the single-family market, causing homeownership to take larger-than-normal slice of renters... the amount of new single-family supply would increase," he wrote.
Sanjay also emphasized that there is still a possibility of an "earlier-than-expected recession." He predicted, "The current recovery... is more than 6 ½ years old. The longest period of economic expansions was 10 years... So the nation's economy has another 3 ½ years. However, a new trend shows that when unemployment reaches its natural rate of 5.0 percent or below, a recession follows within 11-61 months after..."
