The multifamily market remains resilient. In the latest developer sentiment report from Allen Matkins and UCLA Anderson Forecast, which is released semi-annually, developer sentiment is strong in all of the California markets. In the previous survey, developer sentiment dipped below 50%, meaning that developers were not optimistic about the three-year outlook. This round, the market unexpectedly bounced back with sentiment above 50% in every one of the six California markets surveyed.
“I am always relatively bullish on multifamily over the long term because people need a place to sleep,” John Tipton, operating partner at Allen Matkins, tells GlobeSt.com. “Multifamily has been very strong in almost all of our surveys. Six months ago when we did this survey, sentiment dipped a little bit. The thinking at that time was that it had been so good for so long, and now it is retreating. Now, it has popped back.”
The reason for the short-term change is unclear, according to Tipton, who says that there could be a number of explanations, including the presidential election. “Why there was a pop back is hard to know,” he says. “The underlying fundamentals have not gone away. California continues to create a bunch of jobs and people are making more money, and that supports increased development and multifamily. The negative sentiment six months ago may have been an anomaly. There can be a macro event that makes people nervous, so maybe the post election environment made people less bullish on multifamily. The trend has always been very strong, and as long as we keep creating jobs, there is no reason why it is going to change.”
While this is great news for the runway of the market, the optimistic sentiment is only slightly above 50%. This could mean that developers are cautiously optimistic, and sentiment may be back down in the next survey. “Nothing can go on forever,” says Tipton. “The nature of human existence is a nature of cycles. Here we are seven years after the recovery, which is honestly a long period of recovery. This has been long and steady. Job growth may be slowing on a percentage basis in California, but we are still growing jobs.”
The multifamily market remains resilient. In the latest developer sentiment report from
“I am always relatively bullish on multifamily over the long term because people need a place to sleep,” John Tipton, operating partner at
The reason for the short-term change is unclear, according to Tipton, who says that there could be a number of explanations, including the presidential election. “Why there was a pop back is hard to know,” he says. “The underlying fundamentals have not gone away. California continues to create a bunch of jobs and people are making more money, and that supports increased development and multifamily. The negative sentiment six months ago may have been an anomaly. There can be a macro event that makes people nervous, so maybe the post election environment made people less bullish on multifamily. The trend has always been very strong, and as long as we keep creating jobs, there is no reason why it is going to change.”
While this is great news for the runway of the market, the optimistic sentiment is only slightly above 50%. This could mean that developers are cautiously optimistic, and sentiment may be back down in the next survey. “Nothing can go on forever,” says Tipton. “The nature of human existence is a nature of cycles. Here we are seven years after the recovery, which is honestly a long period of recovery. This has been long and steady. Job growth may be slowing on a percentage basis in California, but we are still growing jobs.”
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