A 57% majority of voters in last week's GlobeSt.com Quick Poll indicated that the multifamily sector is best positioned for a market recovery, with industrial trailing farther behind at 26%. Office, retail and hotels registered less optimistically in single digits. Richard Donnellan, principal and founding partner of Apartment Realty Advisors in Boca Raton, FL, says these results are not surprising given ongoing troubles in the nation's housing market:

"With every percentage point drop in the homeownership rate, one million renters are put back in the rental pool. During the big housing run-up, whenever someone was leaving an apartment it was because they were purchasing a home or a condominium. Today that trend is reversing."

"We will continue to see demand increasing while new supply of rental housing is coming to a screeching halt, also because of the credit markets and the lack of construction loans available for new development. It's really going to present itself in the imbalance that we'll see in two years between the lack of new supply while demand continues to increase over time as we come back into a more normal homeownership rate and the economy starts to recover."

"Any impediment to someone purchasing a home is good for multifamily rental housing. People have to live somewhere, and they're going to be renting. With lending standards much tighter today, you have to have a good credit score and a down payment in order to get a mortgage. Credit is not as available as it was when it was easy for people to buy a home."

"While it will be more difficult to purchase a home in many years ahead, you will also have people who are psychologically averse to buying a home because they have seen such a rapid decrease in value, either in homes that they own or their friends' homes. We're moving back to renter-by-choice versus people leaving the rental market to purchase a home or condo. That trend will be in place for the next three to five years."

"We also have the echo-boomers starting to graduate from college and getting their first jobs. That's a very real demographic and they will be renting into their 20s and early 30s."

"Capital is out there, and our organization nationally has closed 43 transactions so far this year. Financing is available through Fannie Mae and Freddie Mac, so there is more liquidity for investors who are looking to purchase rental communities today."

Instant Insights /

Apartment Realty Advisor's Donnellan

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