Good and bad news for multifamily housing – Missoula Commercial Real Estate

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Commercial Real Estate for Sale and Lease  Despite recent gains in construction, potential economic scenarios unsettling lenders, investors

By Steve Bergsman, Friday, January 18, 2013. Inman News®


When the single-family residential market boomed from the late 1990s through the mid-2000s, builders were so flush with cash they could afford to overpay for raw land, thus crowding out those who wanted to build multifamily rental housing.

The pace of rental housing construction quickly fell behind the 350,000 units needed to maintain balance in the market. Things got even worse during the Great Recession, when only between 100,000 and 170,000 new units were constructed annually.

So the recent boom, which saw almost 230,000 new multifamily units constructed in 2012, is about catching up to demand.

To get to that number and, hopefully, beyond, capital has to be readily available, and at least one major lender to the industry believes that although demand is there, the recovery is fragile and it wouldn’t take much more than a rise in interest rates to cause considerable problems in the whole sector.

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