The multifamily market has benefited from strong demand for apartments and rising rents, but tenants are starting to push back when landlords get too aggressive on prices.
“Up until the fall of 2011, apartment operators were successful in pushing rents [higher] while retaining resident rates,” according to Aimee Baumiller, a researcher at PNC Real Estate.
But renters are starting to become “price sensitive” and “perhaps landlords are becoming too aggressive,” the real estate researcher said during a PNC Financial Services webinar this week.
This resistance could lead tenants to trade down to lower-cost properties, opt for smaller units or combine households, she warned.
However, PNC’s real estate researchers do not expect new supply to grow significantly until late 2013 or even 2014.
“We see rent growth easing slightly in 2012, with annual rates close to 3%—moving to more modest levels in 2013 and 2014 as more supply is delivered to the market” the real estate researcher said.
“We do not see overbuilding as a major concern in 2012,” Baumiller wrote in a recent report on the multifamily market.
Current estimates show multifamily completions should run about 75,000 in 2012, 190,000 in 2013 and 240,000 units in 2014. The 20-year average for multifamily starts is 237,000 units per year.
