The Unassuming Economist

From a paper by David M. Brickman:

“Over the past four decades, the multifamily housing market has grown and evolved significantly to become a much more prominent part of the US housing landscape. Since 1990, the total value of the multifamily housing stock has grown more than tenfold, from less than $600 million to more than $6
billion today, as both the number and value of multifamily housing units have steadily increased. Although a broad range of macroeconomic and demographic factors have contributed to this growth, the primary catalyst has been the establishment of well-functioning multifamily capital markets, defined by large liquid debt and equity markets and a largely unconstrained private rental market. Against this backdrop, multifamily housing has become a standout among commercial real estate in terms of capital flows and performance while disproportionately contributing to the nation’s supply of newly constructed housing at this moment of intense shortages and affordability challenges.

Given the success of the modern multifamily capital and housing markets, there is value in understanding their development to identify market areas in need of additional investment and to inform regional and global markets elsewhere. To that end, this brief identifies and examines key moments in the evolution of multifamily debt and equity flows from the late 1980s through today and their impact on capitalization rates, property values, housing supply, rental rates, and rent growth. The brief concludes with a discussion of policy implications.”

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