No matter how you slice it; people will always need a place to live. As the nation pulls through the tail end of a huge housing dislocation, many are faced with the tough realization that it’s fundamentally better to rent than buy a home.
With such a tight inventory and limited supply of residential housing units, when compared to post-crisis levels, multifamily is the best way to go as it attracts higher prices so rental rates can go up, which will make it more likely that people will build additional products over the next couple of years, explained United Realty Partners CEO & chairman Jacob Frydman.
United Realty has taken a keen interest in multifamily investing and believes real estate provides investors with the best assets and hedges against higher interest rates. "The demand is there and as the market recovers you’ll see more multifamily construction, which is ultimately a good thing," Frydman explained.
United Realty isn’t the only company that sees multifamily as a lifeline for institutional investors as the market rebounds. Resource Real Estate is also placing bets on multifamily and is looking for properties that are the 'right buy'.
Frydman with United Realty Partners says now is a good time to snatch up various multifamily units. "In those markets, you need to look for growing jobs, income and population, and if all those exist then it’s a good market to pursue," the CEO said.
Investors like Frydman may be sitting pretty in multifamily for a while since a majority of 20-somethings continue to suffer from a failure-to-launch syndrome caused by surging unemployment levels during the recession.
According to a PNC Financial Independence Survey ($75.90 -0.1%), 40% of millennials and more than 28% of 25 through 29 year-olds still live with parents or other relatives.
Interestingly enough, there are more young men (44%) than young women (37%) living with parents. As the economy continues to walk the line of the housing market’s new normalcy, the shift will be for Gen Y to end up as life-long renters, making their life experiences far different from the baby boomers who came before them.