- The employment picture should turn positive in the current quarter and remain so through 2005, when unemployment should fall to 5.2%, which is where the Federal Reserve wants it.
- There will be no change in the Federal Funds rate before the middle of next year, or even later, and mortgage rates will be rising slowly, climbing to around 7% by 2005.
- At an all-time high of 68.2%, the homeownership rate is poised to go higher, especially among minorities.
- At 11.3% for buildings with five or more units, the vacancy rate is almost as high as it was during the late 1980s. Vacancies for the industry overall are 9.6%, the highest since records started being kept in 1956. There are now 3.6 million vacant units for rent nationwide, and owners and developers could convert some of these apartments into condos, for which the market is strong. The absorption rate of rental units is currently about 60%, compared to about 70% normally.
Despite some of the negative factors in the marketplace, construction on buildings with five or more units continues to move forward, Seiders noted. Almost 300,000 units are now under construction, the largest number since 1989.
But construction will soften, he said, mostly in market-rate properties. Subsidized, tax-credit units will hang in there at roughly 75,000 a year. And the condo segment of the industry will grow from a current annual level of 75,000 units to some 90,000 toward the end of 2005.
Multifamily Leadership Board Conference Call — Jan. 8, 2004
Industry expert Ron Witten, president of Witten Advisors, Dallas, will brief the members and invited guests of the Multifamily Leadership Board on what to expect in the coming months in terms of trends and hot markets. For information on participation, contact Laura Zaner, 800-368-5242 x8563.
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