There may be 18.4 million vacant homes in America amounting to an 11 percent vacancy, but that’s not stopping Fannie from throwing $20 billion in funding behind construction funding. As CNBC’s Diana Olick reports, “they’re getting behind the apartment boom.”
As the mythology of home ownership dies on the vine with continued lower prices and more people walking away a greater percentage of people will rent. Olick makes an insightful point about the next generation of potential home buyers.
Younger Americans have seen what home ownership has done to their friends and families, and many want no part of it. Credit has become very nearly elitist. Home prices, whatever your particular data provider preference might be, are still falling.
Lots of apartments were converted to condos during the boom and few apartment units were built for lack of financing. Now developers are looking to catch up and cash in, building apartment units as fast as they can with Fannie Mae there to help with the funding. “Reis Inc. predicts 51,314 units will be completed in 2011, and 82,971 units in 2012, and CoStar predicts over 100,000 will be completed in 2012 (many of those likely starting now),” reports Olick.
So, not enough supply and lots of new demand, Olick says, “multi-family has nowhere to go but up.”
Haven’t we seen this before?
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