A lull in the single-family housing recovery this winter made for a surprise comeback in a sector thought to be overbuilt and overblown: multifamily real estate investment trusts (REITs).
After struggling throughout much of 2013, apartment REITs returned a striking 12.75 percent, making this sector of commercial real estate the most profitable for the first quarter of 2014, according to the National Association of Real Estate Investment Trusts. Overall, equity REITs were up just over 7 percent for the quarter.
“People have short memories,” noted Calvin Schnure, vice president of research at the association. “We’ve seen a big increase in construction from the very depressed levels that we had during the depths of the recession, but in terms of overall construction, we’re barely back to what a trend pace would be with a national population the size we have in the U.S.”
New apartment construction has certainly been robust, with nearly 42,000 units completed nationwide in the fourth quarter of 2013, according to forecasting firm REIS Inc. That was the highest since 2003 and a harbinger of things to come in 2014.
About 1 in 3 new housing units being built are rental apartments, the highest level in 40 years, according to the U.S. Census. At the same time, vacancies continue to drop and rents continue to rise, albeit not as strongly as they had been during the worst of the housing crash.
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