According to a recent report released by the Mortgage Bankers Association (MBA), an influx of new multifamily complexes are scheduled for construction in the coming years – a change that could mean higher vacancy rates for many property managers.
The report states that 2,653 separate multifamily lenders offered $110.1 billion in mortgages for projects with five units or more in 2011. The total dollar volume is a 60 percent increase from that recorded in 2010. The MBA notes that the increase is not due to a few lenders giving multiple loans – in fact, 72 percent of lenders made loans of five or fewer.
The MBA information fits with a recent report from the U.S Department of Commerce stating that multifamily housing starts had risen 37 percent by August. Furthermore, according to Reis, between 160,000 and 200,000 new units will be opened in 2013. By 2014, that number will have grown to 320,000.
In 2011, Reis notes, only 41,000 new units were constructed, creating a great need for new units and plummeting vacancy rates. Now, as the retail housing market improves, property managers may see fewer rental applications and higher vacancy rates.