Specific to the multi-family sector, MBA does not expect an upswing until 2004. "We expect that housing starts this year will be flat; single-family starts are increasing, and we expect multifamily starts to decline," Duncan notes in response to a GlobeSt.com inquiry during the conference call. According to the report, the quarterly average for multi-family housing starts in 2002 was 346,000, while that projected figure for 2003 is just 326,000. "In discussing the issue of house prices, one thing that we've pointed out to people is that the decision that the household makes is, in significant part, the relationship between rent--that is their monthly rental payment-- and their after-tax principal and interest payments on a mortgage," Duncan explains. "And what you'll see is that in the short run--that is, over the last year to two years--you have seen that the mortgage payment has actually been lower than the typical rental payment. So what you've seen is the emergence of significant concessions in rental rates across the market."

But that trend is headed for change. "Now we think that that will reverse itself by late 2004," Duncan remarks. The report speculates that multi-family housing starts will jump from 2003's quarterly average of 326,000, to 332,000 in 2004; and to 339,000 in 2005. "And you'll see that the values of multifamily properties over the market have held up well because, in part, the alternative investments for those who invest in those properties have not been very good, but also in part because the long-term demographics are quite supportive of rental markets once employment starts to pick-up," he says.

In their summary of the outlook for the next three years, MBA economists including Lyle Gramley and M. Veronica Warnock, estimate that unemployment rates will begin to decline, slowly, beginning at some point in the last quarter of 2003. "Those households which may have recombined from two households into one--maybe kids moving in with parents or people who previously had their own apartment and are now sharing an apartment--we think when employment and incomes start picking up late next year, you'll start to see an expansion of those in demand for rental properties increase," Duncan reasons. "But it will be probably the end of 2004 before we see that happen."