Boom on Multifamily – enormus impact from the millenials
Even ten years after the crisis, the effects on the US real estate markets are still clearly felt. The banks are still hesitant about the financing, it is far from being built as much as it would be necessary. In the process, a new generation cohort is pushing for the residential real estate markets: the Millenials, a huge population of 20 to 39 year olds. This group of about 80 million people has enormous impact on the US multi-family markets with changed claims behavior. A sustainable boom on Multifamily is the result.
The millenials differ significantly from other previous generations. They are significantly better educated and focus more on self-fulfillment and contentment in family and friends, rather than careers. Status symbols and prestige are no longer high on the wish list. In the past, home ownership was a symbol of having made it, rented apartments are increasingly becoming the focus. The experience of what happens when the mortgage on the home can no longer be served, has shaped this section of the population. In addition, the flexibility of a rental apartment is rediscovered.
Most millennials move from their parents’ home for the first time to their own home. Often there are still substantial repayments to pay for the studies, which favors the choice of a rented apartment. This has a significant impact on residential real estate markets: the home ownership rate dropped from 69.4% in 2004 to 64.2% in QI 2019. All signs point to this trend continuing for a long time. One can reasonably speak of a sustainable boom on Multifamily in the USA.
The Baby Boomers
The aged Baby Boomers, that is the generation of the vintages from the mid-1940s to the mid-60s, like to exchange their own home for an apartment when they are older. They show quite an elevated claim behavior. The children are out of the house, which has now become much too big. There is the choice of an upscale apartment in a good location to do very well. This reinforces the boom on Multifamily.
The construction activity
It is built less than it would be necessary. The banks are still reluctant to finance construction projects. The required share of equity is much higher than before the crisis. This complicates the business of project developers. The run on suitable plots in good locations has intensified. Each land purchase is subject to a bidding competition.
Multifamily defies market turmoil
But Multifamily is also a rock-solid, defying market turmoil better than other real estate markets. Even in times of crisis, revenues from Multifamily are more stable than those from other real estate segments. It always has to be used. Multifamily markets are also recovering faster after a recession than other real estate sub-markets. This emerges from a study by the largest global real estate consultant, the CBRE Group (CBRE Research CBRE Econometric Advisors, Q 4 2018.
Multifamily can therefore also be regarded as a comparative crisis-proof real estate investment.
Multifamily with Prime Invest
Prime Invest constantly identifies appropriate lucrative real estate investments and prepares them alone or in cooperation with well-known and selected partners. We focus on that
• Development of new residential complexes
• Refurbishment of existing residential complexes
A development offers higher returns, but also higher risk, because the rentability has yet to prove. Yields start to flow after the construction period.
In the case of refurbishment, the income flows immediately, the acceptance and thus the rentability of the location are historically proven. The return is slightly lower, but still attractive.
If you want to participate wit the boom on Multifamily with Prime Invest , we look forward to hearing from you. You are welcome.