Changing Times Fuel Demand for Family Residential Homes
Population growth has for a long time been the major driver for the residential homes market. Investors have for long been targeting areas with high populations for new developments which led to development of live-and work cities and huge multifamily development projects. Developer activity shows that an estimated 280,000 multifamily homes are planned for development in 2020. This sector has not seen a decline in prices even in the wake of the Coronavirus pandemic making it one of the most attractive moving forward. There are two main factors driving demand besides investor activity namely; Covid 19 and the Rent-by-choice market
In the increasingly unpredictable real estate market, only one thing is sure and that is that people will need houses whatever the circumstances. For this reason family residential housing is emerging as a safe haven for investors wary of emerging trends like short term rentals and shared spaces. Family residences are seen to have a relatively stable rental demand, a diversified renter base and a better market value than other residential categories. Financiers like Fannie Mae and Freddie Mac have also boosted the sector by providing investors with potential liquidity benefits which are not availed for other types of housing. These benefits have given a major impetus to developers since 2016 and are most likely going impact of their activity beyond 2020.
The Covid-19 Effect
Covid-19 has changed the way people look at communal living. Quarantines and lockdowns have given a new meaning to privacy and its value on personal health and safety. People now want to live in private to avoid contracting the disease. Those living in high capacity apartment blocks and densely populated cities have had to remain in constant anxiety as the try the social distancing practice. There is a new shift towards low density multifamily residences especially for families. The future looks set to favor low density residences and more social distanced settings.
Rent –by- Choice market
A recent report by The National Association of Home Builders (NAHB) found that 22% of adults between the ages of 25 and 34 still live with their parents or guardians though they can afford living on their own. This constitutes a market of over 8.7 million potential home renters and buyers, according to a report by the Kaiser Family Foundation and the Census Bureau. Millenials are finding it hard to balance home ownership with their other demands like paying a student loan, buying a car and other lifestyle demands opting to postpone moving out of their childhood homes. Developers are rising to the challenge offering different options like homes near working places. Others are building all-inclusive residences incorporating entertainment, shopping and leisure spots in residential settings with an objective of making homes more attractive to the millenials otherwise being referred to as the “rent-by-choice” market.