Pent-up Demand Moderate Income Apartments Millennials & Fewer Homeowners
Ella Shaw Neyland, president of Steadfast Income REIT, recently joined REIT.com for a video interview at REITWorld 2013: NAREIT’s Annual Convention for All Things REIT at the San Francisco Marriott Marquis.
Neyland was asked to comment on demographic trends and their impact on Steadfast Income’s growth prospects in the multifamily sector.
“I think we’re going to see an outsized demand for our type of apartments in the next two to seven years for a variety of factors,” Neyland said. One such factor is the millennial generation’s preference to live in apartments as opposed to homes, Neyland explained.
“For one thing they can’t afford it…the second thing is that they’ve seen their parents either lose equity in their homes or lose their homes,” she said. The millennial generation, which totals about 68 million, also wants to have flexibility to be able to move for a new job, Neyland added.
Other factors influencing growth include pent-up demand for household formation, Neyland said. She also pointed to the potential for more foreclosures coming from a percentage of homeowners who are current on their payments, but underwater in terms of the value of their home. A drop in the homeownership rate of just one percent translates into a million new entrants into the rental pool, Neyland remarked.
Meanwhile, Neyland pointed to baby boomers wanting to downsize, and legal immigration of around a million individuals per year, as other potential growth factors.
The combination of all these demographic trends is good for the apartment sector overall, but “it’s great” for Steadfast Income’s particular niche, according to Neyland.
Looking back at Steadfast Income’s active pace of acquisitions in 2013, Neyland noted that “it’s been an amazing period for Steadfast Income REIT.” She explained that the company chose to focus on the central corridor of the U.S., and “we are increasingly finding they are not ‘flyover states’ they are ‘go-to states’ because that’s where jobs are being created.”
Neyland also mentioned that Steadfast Income apartment rents are priced at a point that is in line with salaries for the majority of new jobs being created.
Source: Reit.com 12/20/2013 | By Sarah Borchersen-Keto