It's against the backdrop of the trends cited by Muoio that Ten-X recommends that investors consider a sale of apartment assets in cities that have been in the vanguard of the shift toward urban centers and now see vacancies rise and rents flatten amid too much supply. They're San Francisco, New York City, San Jose, Miami and Milwaukee.

Ten-X also cites Sacramento, Las Vegas, Atlanta, Phoenix and Dallas as the current best markets in which to buy multifamily assets. The firm says these metro areas are being fueled by robust local economies, with a steady influx of new jobs attracting residents who are still eager to pass up home ownership for an opportunity to rent in a large metropolis.

Several economic factors have resulted in net positives for the multifamily sector and prices in core markets are at an all-time high. But just how long can the market continue on this trajectory? Join us at RealShare Apartments East on Feb. 28 and March 1 for insights on succeeding in the right markets as well as navigating and finding opportunities in the more challenging ones. Learn more.

IRVINE, CA—What goes up must come down, even if only slightly and gradually. After a long run well ahead of its prior peak, the multifamily sector may now be headed for a slowdown, Ten-X said Tuesday. Among other factors, the online real estate marketplace cites another wave of new supply coming this year following a record number of completions in 2016.

A combined influx of 500,000-plus units between this year and last is expected to drive vacancies as high as 5.6% over the course of 2017, before climbing above 6% during a modeled cyclical downturn beginning in 2019. Already, the slight uptick in vacancies has begun to slow rent growth, with the third quarter posting the lowest quarterly increase since 2013. Ten-X Research projects rent growth will continue to grow by roughly 3% annually until 2018, before leveling off to roughly 1% annual gains during the two-year modeled downturn.

The firm also notes that home ownership, while declining sharply over the past several years, has begun to show signs of stabilization. Even as apartment demand is expected to remain largely unaffected, absorption rates could slow if the homeownership trend begins to gain momentum. Conversely, though, Ten-X says that overall economic indicators, including steady employment growth and rising wages, may give the market a boost by pushing Millennials out of their parents' homes and into the rental market.

“For years, the multifamily sector has been reveling in the spoils of a massive cultural shift toward urbanization and falling home ownership,” says Peter Muoio, chief economist at Ten-X. “As Americans continue to move to certain major cities in droves, developers have responded by making huge investments in those areas, flooding the market with new apartments. While many larger metros appear to have reached a critical mass of supply and are now seeing fundamentals begin to cool, a strong economy and more limited development continue to make multifamily an attractive bet for investors across the country.”

It's against the backdrop of the trends cited by Muoio that Ten-X recommends that investors consider a sale of apartment assets in cities that have been in the vanguard of the shift toward urban centers and now see vacancies rise and rents flatten amid too much supply. They're San Francisco, New York City, San Jose, Miami and Milwaukee.

Ten-X also cites Sacramento, Las Vegas, Atlanta, Phoenix and Dallas as the current best markets in which to buy multifamily assets. The firm says these metro areas are being fueled by robust local economies, with a steady influx of new jobs attracting residents who are still eager to pass up home ownership for an opportunity to rent in a large metropolis.

Several economic factors have resulted in net positives for the multifamily sector and prices in core markets are at an all-time high. But just how long can the market continue on this trajectory? Join us at RealShare Apartments East on Feb. 28 and March 1 for insights on succeeding in the right markets as well as navigating and finding opportunities in the more challenging ones. Learn more.