Multifamily Demand Continues Its Climb

In May, the average length of time that a rental unit sat empty fell to 26 days, the shortest duration since August 2022, according to a Marcus & Millichap report. It also noted that new lease applications per unit increased in the last two months, and the velocity of lease renewals per unit also grew. 

Demand was never a significant problem for multifamily and new signs are emerging that this trend continues to move in landlords’ favor.

Certainly many apartment residents know multifamily housing these days can be very enticing with the continued onslaught of amenities, indoors and outdoors, some new to the category to compete—organic gardening and beekeeping, anyone? Also, most new buildings offer the popular open-plan layouts with big windows in apartment units, and a strong Wi-Fi bandwidth is essential. Many buildings also deliver the space residents crave since the pandemic for their pets, to work from home and for their own leisure activities.

Another factor that is propelling interest by renters is an unfortunate housing market for buyers where supply is scarce and mortgage rates are high.

Also, the expected major valuation adjustments haven’t transpired, according to Marcus & Millichap. As an example, it reported that the median sale price of an existing home has now climbed for a third straight month this past May to $389,000.

Until the pandemic, the number of existing homes for sale was typically above 1 million. Now, that can’t be said in 18 of the last 28 months. And the stalemate of getting sellers to list continues.

As a result of these trends, many first-time potential buyers continue to remain renters, including many with all-time high incomes. The median income of a renter household has climbed to a record high of about $47,600 in this year’s second quarter.

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