John Affleck and Michael Cohen of CoStar Analyzed More Than $30 Billion in Rentals Traded, the Most in Three Years
Investors grabbed more than $30 billion in U.S. apartments in the first quarter, the biggest January through March haul since 2016.
The frenzy comes despite indications that the high-flying rental sector could be slowing.
According to a new CoStar video detailing the state of the national apartment market, the headwinds in the sector that should weaken demand, such as higher home ownership rates, a huge pipeline of new apartment developments and an aging population, seem not to matter.
“If investors are worried, they’re not showing it,” said John Affleck, vice president of
CoStar Market Analytics.
“Foreign investors in particular are piling into the sector.”
The report also examines how the flood of new supply does – and does not – affect the health of the overall market.
have the fattest pipeline of new supply. Nationally, 660,000 new units are under construction, about 4% of the country’s overall inventory. In those two markets, the under-construction units total more than 10% of supply.
Vacancy in overbuilt markets is surely heading up, said Affleck and Michael Cohen, vice president of CoStar’s advisory services. But overall, the U.S. is under-supplied in housing, both rental and for-sale homes.
The U.S. creates about 1 million new households per year, according to CoStar research. But there is a deficit of about 4 million homes, both rental and for-sale.
“What has been missing in this expansion is single-family home construction,” said Cohen. “We’ve only just begun to hit typical levels.”
Look for vacancies to rise on average nationwide, said Affleck and Cohen.
But they don’t expect buyers to pull back.