Multifamily housing sector experiences value surge

As single-family home prices have yet to hit bottom, multifamily property values have gained significant momentum during recent years.

As single-family home prices have yet to hit bottom, multifamily property values have gained significant momentum during recent years.

Multifamily property prices have spiked 25 percent during the past two years, according to a recent report from Freddie Mac. As a result, investors are taking a more active interest in the construction of these buildings, as the start rate increased nearly 50 percent during the first five months of 2012 from a year earlier.

"Further increases in rental demand are likely in the coming year as newly formed households postpone homeownership decisions until the economy strengthens and they have accumulated sufficient savings," said Freddie Mac vice president and chief economist Frank Nothaft.

Additionally, based on recent trends, the multifamily vacancy rate is expected to decline further and rental costs could continue to increase for households, Nothaft added.    

Real estate data shows that during the first quarter, an estimated 1.5 million households moved into rental units. This is a 4 percent increase from the beginning of 2011. During this same period, nationwide rental rates increased between 2 and 4 percent in most housing markets.



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