A New Era for Multi-Family

Not so long ago, the pinnacle of being an American meant owning one's own home. But today offers a different story, according to a slate of panelists at the Urban Land Institute's spring meeting.

May 19, 2011
By Allison Landa, News Editor

Courtesy Flickr Creative Commons user Bohman

PHOENIX – Not so long ago, the pinnacle of being an American meant owning one’s own home. But today offers a different story, according to a slate of panelists at the Urban Land Institute’s spring meeting. In a panel entitled “Renting: Living the American Dream,” a slate of industry experts discussed how the recession has turned housing-related fantasies on their collective ear.

“Living in an apartment – there’s no stigma like there was back in 2006 when everyone was buying a home,” Transwestern vice president Jack Hannum noted.

More than simply lacking stigma, apartment living is now widely considered more desirable than homeownership, National Multi-Housing Council president Douglas Bibby said. Bibby believes that today’s market offers an impressive trifecta for those in the multi-family business.

“First is the horror that went on with the single-family side,” he said. “That has had a lingering psychological effect. Second is pent-up demand, and the third is very, very low resident turnover. The back door is basically shut. People just aren’t leaving.”

This is occurring in a strange climate of not-so-rapid recovery. Marcus & Millichap managing director of research services Hessam Nadji, who served as moderator for the panel, characterized today’s economy as in a state of slow but sure healing.

That said, he added, the market is still licking its wounds.

“The long and short of it,” he said, “is while we’re very concerned with some serious issues like the record amount of debt (amongst homeowners) … on the global scale, we have a lot of uncertainty and turmoil. Of course, the Middle East is in the center of it right now with energy prices, which has been sapping our growth over the past few months.”

And in the midst of this turmoil, Nadji said, job growth has made itself evident. He estimated that between 6 and 6.5 million jobs will be created by the end of 2012.

BRE Properties president & CEO Constance Moore asserted, however, that the face of employment – and thus the nature of housing – has shifted.

“I’m not so naïve to think that there will never be another homeowner in this country,” she said, referring to the shift toward renting, “but I do think we shouldn’t underestimate the psychological change that has happened. Work has changed. You used to have a 30-year job, a 30-year mortgage, and if you’re lucky, a 30-year marriage. That has changed.”

Nadji echoed Bibby’s assessment that pent-up demand is fueling the fire behind renting as opposed to owning.

“We had approximately 3 million young adults move in with family between 2005 and 2010,” he said. “As these individuals get more confidence in the economy … they move out into apartments. They are coming back out and forming their own renter household.”

Robin Hughes, president & CEO of affordable-housing firm Adobe Communities, said increased demand has bolstered her work.

“With our tenant population, there’s stability and projected growth in that area,” she said.

But Bibby takes a more cautious approach.

“As soon as home prices start to stabilize, everything will loosen,” he said with regard to the strength of the multi-family market. “I’m not complacent at all.”