Digested From "Apartment Market Positioned to Benefit From Housing Downturn, Demographic Shifts"
Multi-Housing News (12/07) by Lynwood Thompson

In its 2008 forecast, Marcus & Millichap expects such factors as tighter mortgage underwriting, rising residential foreclosure activity and job growth will generate adequate demand in the nation's apartment sector to offset competition from shadow rentals at the macro level. Apartment development has remained largely in check, with only a moderate increase in completions projected over the next 12 months. Some previously hot housing markets, however, are facing a glut of for-rent condos and single-family homes. As a result, local vacancy rates in these markets are on the rise, although a major correction is not expected. The firm further predicts that upcoming demographic shifts will work in favor of apartments. For instance, approximately 70 million echo boomers will make their way through college over the next decade. It should be noted, though, that there are some near-term trends worth watching, including a projected shift in performance by property class. In 2008, the Class B/C market is poised to outperform Class A for the first time in years. Other report highlights ranged from apartment vacancy expected to hold steady at 5.8 percent this year to just over 100,000 apartments slated for delivery between now and the end of the year. That is up from approximately 84,000 apartments in 2007.