Multi-family housing developers have benefitted from the recession and a tight lending climate, but rentals are often being constructed in areas with strong seller’s markets, according to apartment pipeline data from Axiometrics cited by the Wall Street Journal.
Areas with a true sellers’ markets – cities like San Jose, Calif., San Francisco, Austin and Phoenix – are seeing a surge in multi-family development because buyers are willing to rent while they wait for a more advantageous market.
The trend runs against the conventional wisdom that rental apartments become more desirable in weaker housing markets. But in cities with a buyer’s market – such as Cincinnati, Cleveland, Providence, Jacksonville and Hartford, Conn. – multi-family developers are scared off by competition from the single-family housing market. [WSJ]