Future Renters and Apartment Demand Factors

As discussed in RealWorld 2018 sessions  As the apartment industry runs through its cycles, changes in apartment demand and demographics are fostered by economic fluctuation. And with the expectation that the economy is on the cusp of a new direction, multifamily strategies are likely to shift. Various factors dictate apartment demand and how future renters look. In the current cycle, the industry adjusted to historic household changes and embraced young, single renters and empty nesters looking to downsize. But as younger renters finally start to marry, settle down and have kids and the working-age population growth slows, the nation’s apartment makeup is bound to look different over the next few years. The strength of the economy is sure to be a factor on just how multifamily is reshaped. It’s likely going to be sooner than later that the already softening industry shifts focus with maturation of some demographics and depletion of others. Economists predict the economy will recede by 2020 Economists say conditions for a recession are edging closer and that markets will start feeling the squeeze in earnest by 2020. A signal, notes RealPage Chief Economist Greg Willett, is that the gap between interest for long-term and short-term treasury notes is tightening. Typically, long-term rates are higher than short-term but when the two intersect conditions have historically been ripe for a recession. The gap has steadily closed since the fall of 2013, according to the Federal Reserve Bank of St. Louis, and dipped to its tightest in July. This fall, when the Federal Reserve is expected to boost interest rates by 25 basis points, it could get even tighter. “In the best case, that’s going to put us at even at that point,” Willett said at RealWorld. “For the last seven times you’ve had this inflection between these two measures, we’ve had a recession within 18 months.” Willett said it’s not a guarantee...