Recovery not likely to harm multi-family sector

August 27, 2012 03:45 PM

The housing market generally appears to be recovering, but CNBC said it’s not necessarily happening at the expense of the multi-family sector, which boomed as home sales and home prices plummeted.

The latest data shows home sales are rising yet prices for those homes remain flat. Simultaneously, rents continue to rise and push affordability back in favor of buying, CNBC said. Additionally, with multi-family construction up 30 percent annually in July and permits for such buildings 47 percent greater, an oversupply could be on the horizon. 

Still, because of the strict lending standards and several important cultural shifts, many housing experts told CNBC they don’t foresee the bottom falling out of the multi-family sector.

“For the first time since World War II, the United States is experiencing increased levels of urbanization,” Eric Bloom, a senior research analyst at Pike, told CNBC. “By 2021, over one-fourth of the residential stock of the United States will be in multi-unit residential buildings.”

That high demand is keeping the fundamentals for the multi-family sector strong, according to Chandan Economics founder Sam Chandan. Though the forthcoming supply may level off growth — and that has slowed investors’ interest in multi-family of late — it won’t deliver a big blow unless housing begins booming again. [CNBC] — Adam Fusfeld

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