Owners of rental units and the property managers they hire are smiling and here’s why…
These folks, the lenders and the banks that provided the liquidity are now feeling the pain of a reversal of fortune.
Many of the paper investors, hedge funds and Wall Street firms are now accepting foreign aid (in the form of new partners) to stay afloat and weather the latest storm. It always amazes me that the watchdogs and safety features built into markets seem to dissolve periodically and big time. But the multi family market is holding up quite well.
Owners of rental units and the property managers they hire are smiling and here’s why…
Supply:
The boom created a hot market for TIC and condo conversion. This created a dearth of supply of rental units as they were taken off the market and owners that sold or converted their rental property during these heady times did quite well.
Higher Land Prices:
The boom also created a land buying frenzy that increased prices. According to via the National Real Estate Investor: “insights from members of NAHB’s Multifamily Leadership Board suggest that developers of rental apartments were virtually shut out by the deep pockets of publicly traded home builders and condo developers at the peak of the housing boom.”
Cost of Construction:
No doubt China has something to do with this. The cost of building materials like copper and concrete have been increasing for many years as boom builders such as China buy up construction materials worldwide.
The cost of land plus the cost of construction kept multi family new building in check.
The resulting high costs of materials and the land coupled with the disappearing supply of existing rental stock, caused by the condo/TIC boom has owners of rental property smiling. This boomlet for rentals will take quite a while to unwind. As Greenspan recently said, there has to be a selling climax for property to find its natural equilibrium.
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