U.S. rents are projected to rise 5.1% this year, with 94% to 95% of apartments expected to be rented out, Greg Willett, vice president of research for apartment tracker MPF Research, told the National Association of Real Estate Editors conference in San Antonio.
Willett was one of three speakers on a panel titled, "Multi-Family Boom: What Makes It Sizzle When Other Sectors Simmer."
Willett told the conference audience that apartment demand is skyrocketing everywhere but Las Vegas. And apartments make up just half of the overall rental stock, with houses, townhomes and mobile homes making up the rest.
"Single-family is much bigger than people realize," he said.
Occupancy varies by apartment type, added Stacy Hunt, executive director of Greystar Real Estate Partners, which manages more than 187,000 apartments. Lower-tier Class C apartments, for example, have lower occupancy rates because of the types of jobs tenants have in differing building types. Class C buildings, he said, include a lot of hard-hit construction workers.
"I'm not seeing boosts (in occupancy and rents) across the market," he said. "It's more the A's and B's."
Hunt reported further that Lennar Homes is getting into the multi-family business, apparently as a way to hedge its bets.
One of the biggest fears facing big landlords, Hunt said, is what happens if Fannie Mae and Freddie Mac are eliminated. Congress and the Obama Administration are looking at a variety of reforms, include plans to replace to two government-sponsored mortgage enterprises with newer entities.
For apartment building owners, however, the reforms could lead to higher interest rates, less financing and, ultimately, falling prices for multi-family properties, Hunt said.
A third member of the panel was Walter Moreau, executive director of Foundation Communities, a Texas non-profit organization providing affordable apartments and duplexes to more than 2,000 families. Moreau described some of the projects his organization is building.
NAREE Member Jeff Collins is a reporter for the Orange County Register.