Is Multifamily Supply Overtaking Demand? A New Twist to the Debate Emerges

WASHINGTON, DC—The apartment industry has been worried about a bubble forming, and then bursting, in this asset class since the recession. A case can be–and will be in a moment–made that building in this sector is reaching a saturation point in some markets. On the other end of the spectrum a new argument has emerged: not only is a supply bubble not forming–but current development pipeline is not sufficient to meet the real demand for apartments.

Certainly the pieces are all in place for a bubble burst in apartments: after the flood of foreclosures from the recession, apartments were in high demand and short supply. Apartment REITs reliably posted high returns, attracting investment and developers, with an eye on the growing valuations and ever-strengthening fundamentals in this space, set out to build, build, build.