LOS ANGELES—Between young adults who are moving out of their parents' houses and the parents themselves, now facing empty-nest syndrome, “demand is coming from all directions” for multifamily, Marcus & Millichap's Hessam Nadji said on BloombergTV last week. The GlobeSt.com Thought Leader enumerated the ways in which this demand is becoming evident, including what he termed a long-term “structural change” toward renting versus owning as well as investment sales pricing that's now about 33% above the 2007 peak.

“The apartment investment market has been white hot; what's really important is that the fundamentals have also followed the pricing,” said Nadji, senior EVP at MMI. “If you look at the effective rents that apartments are generating, they're up about 25% above the prior peak as well. Prices didn't just go up without the accompanying rent growth.”

Growth in multifamily rents, coupled with the low interest rate environment, is helping spur investor demand, Nadji told the BloombergTV audience. At the same time, renter demand continues to be strong enough that investors aren't worried about overbuilding, although Nadji acknowledged that there are “pockets” where new construction threatens to outpace demand.

While multifamily is a topic of discussion in and of itself, Nadji also linked the apartment sector to the broader housing market and the economic recovery. In particular, he discussed the pickup in new housing starts last month—most notably in multifamily—while also putting into perspective September's decline in new housing permits.

“The balancing act on the demand side with household formation is looking very good on the supply side,” he said. “The builders are not getting ahead of themselves,” while the month was also marked by stock market turbulence and concerns about when the Federal Reserve would begin increasing interest rates. “Those things do weigh on consumers, and builders,” he said.

Nadji also offered insights into what's driving the generational shift toward renting, a change that a BloombergTV interviewer likened to what we're seeing among residents of Germany. For the full video, click here. For all coverage of Marcus & Millichap on GlobeSt.com, including columns and insights from Hessam Nadji, click here.