According to CBRE, 2022 should continue to be a strong year in multifamily sector. As inflation rise and interest rise, you may see the residential market slow down. This will cause the rental market to reactivate. The CRBE report indicates the following. New households are catalyzing demand for rentals, which is expected to match the pace of new deliveries in 2022. We forecast multifamily occupancy levels to remain above 95% for the foreseeable future and nearly 7% growth in net effective rents next year.
Wage Growth an Important Factor in Multifamily Housing
Investors need to continue to keep a watchful eye on affordability, as wage growth is needed to support higher rents and momentum in the sector. While there are inflation and interest rate concerns, a major concern should be wage growth. If wages don't rise, this may cause turbulence in the rental markets.
Wage growth does not need to rise a lot but they need to rise to a sufficient amount to sustain the rental markets in multifamily housing. Hays recruiting experts indicate that companies were looking to increase wages by an average 6% for 2022. Approximate, the rate at which inflation grew in 2021. Currency values increase at an annual rate of 2.02%, making the rent inflation average 3.1%. Within the last 50 years, 1980 had the largest YoY rent increase (11.98%) while 2010 had the smallest YoY decrease (0.25%). Taking these figures into consideration, the rental market may have a good outlook for 2022 and the years to come.
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