People love to compare Real Estate cycles with baseball, and it looks like the multifamily market is entering the 6th or 7th inning, with a good chance of extra innings. Developers are becoming increasingly concerned with rising labor costs, expensive land, and slowing rent growth. While rents have continued to grow, the pace at which they are increasing appears to be leveling off. National rent growth of 3.5% in June was the lowest since the 3.4% of April 2014, and marked a 37-basis-point decrease from the 3.8% recorded in May. This was the eighth month, of the previous nine, in which the rate decreased. Before you get too alarmed please remember rent growth of 3.5% is still above the long-term average. With national vacancy rates less than 5%, multifamily is still the preferred asset type for lenders. According to the WSJ, the U.S homeownership rate fell to the lowest level in 50 years in the second quarter of 2016. In the same time period, renter-occupied housing units increased by 967,000. With millennials increasingly pushing back the age of home ownership, their demand for apartments should keep the multifamily market hot for the foreseeable future. So it’s time to call on the bullpen, but keep your closers seated, as it looks like this game still has a few innings left. Jason Gaffner
