The February 2011 CEL newsletter has a good commentary on the state of real estate today including some less discussed positive factors for multifamily real estate.
Demographics, declining home ownership, and reduced supply (fewer multifamily starts) are prominent in all multifamily forecast discussions - as they should be. Some less discussed factors are that only 12% of renters have plans to buy and rising transportation costs are making renting close to work in an urban environment more attractive. The rising average age of household formations and births of first children is also a big positive for the industry. The decoupling of improving occupancy rates and effective rents from employment statistics is real and here to stay. The economy’s recovery is going to be a long road, fortunately the multifamily industry is going to lead the way forward in this cycle. Chris Lee even forecasts further cap rate compression, which is somewhat surprising given the expectation of rising interest rates.
See http://tiny.cc/4on1u for Chris Lee's article. REIT.com also has an interesting look at declining multifamily vacancy at http://tiny.cc/oui7a
