Why Multifamily Housing is Booming (and Single-Family Isn’t)
September 9, 2014
by David Schawel, CFA
At this year's SALT New York conference, Jean Hynes, the CEO of Wellington Management, took to the stage to discuss the role of active management in today's investment environment. Hynes succeeded Brendan Swords as the CEO of Wellington at the end of June after nearly 30 years at the firm. Wellington is one of the Read More
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives. This article originally appeared on the CFA Institute’s Enterprising Investor blog here, and you can subscribe to receive similar articles here.
The rebound in single-family housing has been tepid. Investors must understand the underlying structural changes, especially why demand has shifted toward multifamily housing and why this shift will persist in the years ahead.
As shown below, the rebound in housing starts has been uneven between single-family and multifamily housing. Single-family housing has rebounded from a trough of approximately 400,000 annual starts to 650,000, but it remains well below the peak of 1.8 million in 2006. It’s a very different story in multifamily housing, in which housing starts are now at levels equal to or greater than pre-crisis at approximately 440,000.
Single-Family Housing Starts (In Thousands)
Multifamily Housing Starts (In Thousands)
Remember, if you have a question or comment, send it to [email protected]