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Multi-family Mayhem

Multi-family Mayhem
CoStar's Norm Miller, Jay Spivey and Michael Cohen
CoStar's  Norm MillerJay Spivey and Michael Cohen enlightened 600 people on the state of the nationwide multi-family markets via webinar on Thursday, and the news is mixed. While an increase in echo boomers reaching prime renting age will help fill apartment vacancies, lack of job growth  may keep some living with their parents until 2011-2013. Absorption may take time, since 118k units came on the market in 2009 and another 44k will come on in 2010. With about 1/3 of renters occupying a single family home or condo, the return of the for-sale housing market will also reduce vacancy.
CoStar's Jay Spivey
Areas with the most new job growth, like Atlanta, Dallas and Houston  will be the first to see absorption, while New York and Chicago  may lag due to lack of job creation. Sales of apartment buildings will be driven by REITs, which have about $40B to invest in apartments in the coming years. Distressed sales currently make up about 30% of apartment transactions, Jay says. Cap rates should be around 8.5% as apartment vacancy  has reached its peak.