CALABASAS, CA–We often hear about the push and pull relationship between single-family and multifamily home activity has hit pre-recession highs, interest ebbing or flowing from one to the other as consumers opt either for affordability and proximity to work or for the traditional American dream of lawns and picket fences. However, according to the Institutional Property Advisors August Research Brief, current market dynamics indicate a robust demand for both.

In fact, Jeffery Daniels, SVP and national director of Institutional Property Advisors' multifamily division, notes that single-family sales activity is at the highest level since the Great Recession, fueling the ongoing trend of potential buyers closed out of that market and turning to multifamily.

“As household formation strengthens and for-sale inventory remains limited,” he says, “a large share of housing demand is filtering into apartments.”

In fact, the Brief reports a home-price increase of 5.8% year-over-year, clear evidence of the demand. “The increase pushed the median to a record high,” it states, “largely driven by strong buyer competition and limited inventory across the country.”

Meanwhile, “In the second quarter, apartment developers completed more than 86,400 units, a 30-year record, but absorption also reached a new peak as over 175,600 rentals were filled.” The ever-rising price of single-family homes as well as the competition is expected to continue to have an upward impact on the multifamily outlook, says Daniels.

Those prices and that competition “for existing single-family homes, as well as a lack of entry-level home construction, will continue to restrict first time home buyers. As a result, current renters and newly forming households will both favor apartment living and sustain rental housing demand,” he notes.

But, also playing into this dynamic is the expectation that Fannie Mae will raise the debt-to-income ratio (from 45% to 50%) which would ease lending criteria, good news for “first-time homebuyers and millennials riddled with student loan debt,” he says. Obviously, the specific impact of this shift on purchasing remains to be seen.