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Hot Multifamily Housing Trends to Watch in 2022

In recent years, the US multifamily market has seen tremendous growth in terms of rental rates, prospects, and a number of new build projects. Some analysts even argue that there hasn’t been a better time to be in this industry than now. In this piece, we will outline some current multifamily housing trends that are shaping the market and people should pay attention to if they want to stay ahead of the curve.

Multifamily is in high demand

The first trend that we are seeing is that the multifamily market has proven to be resilient despite the many implications of the pandemic. This is being driven by a number of factors - since February 2021 new leases have been skyrocketing partly due to scarcity in inventory. That coupled with the fact that millennials are predominantly the age group that spurs the rental market, that is reflected in the continued rise in demand for multifamily assets compared to single-family housing. This can be explained due to the fact that millennials highly value the flexibility of renting a place somewhere, let alone the fact that most of them can't afford the high price tag of a house right now.

Rents are still increasing

Driven partly due to the scarce availability in the multifamily market as well as soaring CPI inflation, investors have largely benefitted from this rate increase which has allowed them to have greater returns on their initial investment. The rents have gone up by 2.5% year over year by the middle of last year, bringing it back to pre-Covid levels, not factoring in the rapid increase since then.

With the current economic outlook not changing anytime soon, it is reasonable to suggest that this trend may remain at least for the foreseeable short-term future.

Inflation is here to stay and so are higher operational costs

Record-breaking inflation coupled with the unfolding energy crisis is pushing operational costs to newer highs. This is partially why rents have been going up at such a rapid pace. One thing is certain - higher operational costs will most likely continue to persist across the multifamily market.

This trend is forcing multifamily to think outside of the box when it comes to ways to maintain and steadily increase Net Operating Income.

Technology is now an expectation, not a luxury

With the rise of technologies such as virtual and remote tours, keylock systems, amenity and reservation request apps, and property management software platforms are rolling out solutions to increase convenience and meet the demand of a highly technological generation. That coupled with the rise of platforms like Airbnb and VRBO, which make it easy for people to find and book short-term rentals calls for multifamily operators to bring their A-game and embrace these technologies.

Finally due to the increased demand for flexibility and young professionals working from home, the increase in flexible stays has also seen a renewed interest. The latter is also a great way of offsetting some of the increases in operational costs mentioned above. Due to the fact that flexible stays have the potential to generate upwards of 70% more compared to long-term rentals, it becomes a no-brainer for multifamily operators and property managers to consider this approach as an auxiliary way to bring in revenue.

Another trend that we are seeing is an increase in the number of new multifamily build projects. This is being driven by a number of factors, including the continued growth of the US population and the increasing demand for rental housing. We are also seeing a trend towards more high-end, luxury multifamily developments, as there is a growing demand for upscale rental properties.

These are just a few of the multifamily housing trends that we are seeing in the market today. If you are a landlord or developer, it is important to stay up-to-date on these trends so that you can make the best decisions for your business.

What are some other multifamily housing trends that you are seeing in the market? Share your thoughts in the comments below!

 

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