Multifamily real estate is proving itself to be a rock-solid investment, and as the economic cards fall in favor of the asset class, its strong fundamentals are cementing into place and turning it into a nearly unstoppable barge of respectable returns on investment. But will the good vibes last?
“Our investors find that it is so much more volatile in other areas of investing that they would prefer to put [capital] in something that is slow and steady and more predictable, and even when it goes down, it always goes back up,” Monument Capital ManagementPrincipal Stuart Zook told HousingWire about investing in multifamily housing.
“It’s a hedge against volatility,” he added.
The reasons multifamily real estate is so stable can largely be attributed to favorable demographic trends. Millennials and Gen-Zers are flocking to cities with high job growth and snapping up the units almost as fast as they go up. These two generations are large and largely cannot afford homes at this point, nor will they be able to for some time.
The average age of the first-time homebuyer recently rose above the age of 30, and rising home prices/interest rates along with lifestyle preferences will most likely keep these two generations renting for a long, long time.
The second, lesser known demographic trend in favor of multifamily demand is Baby Boomers downsizing. The second largest living generation is showing strong demand for many of the same amenities that Millennials and Gen-Zers want. Walkability, access to cultural centers and entertainment. Many Baby Boomers are choosing to sell off their homes and rent to allow for travel or more luxurious lifestyle in their golden years.
What this means is that the multifamily market is in a generational sandwich, getting major love from the whippersnappers and the fogeys.
