Earlier this summer Jeff Adler, the Vice President and General Manager of Yardi Matrix, presented a webinar sharing his opinions and predictions on the state of both the multifamily market and current economy. Yardi published a follow-up News Bulletin to disseminate Mr. Adler’s main talking points with their readers. BAM looks at how Jeff Adler sees current trends in the multifamily industry and where he sees the industry meshing with the economic climate in today’s BAMblog…
The good news for everyone, whether in the industry or not, is that Adler reinforces what experts in finance as well as real estate have said – which is that the economy is in great shape. He also notes that wages have risen and the job market is good with low unemployment. While Adler did mention rising inflation, he also pointed out that he believes it will stop short of breaking 2.5 percent. For the brief (and potential) downside of the webinar, Adler did outline some signs that often precede a recession; however, he assuaged any anxiety by suggesting there’s no reason to worry until the yield curve inverts – which he does not anticipate happening for another two to three years.
When Adler addressed the multifamily industry, he discussed the changing climate as we head into a later point of the cycle. While demand is strong, at this point it’s shifting more to lower-cost cities spurred on by both population and job growth. Secondary markets have out-performed gateway markets recently, due in large part to those markets having a jump in tech sector growth. The Yardi bulletin notes that it takes time for a city to develop as a technology hub; however, the “geography of jobs” is changing thanks to cost advantages and intellectual/talent pools. One concrete example of the shifting job markets and emerging tech centers in many cities is the current search for Amazon’s second headquarters. The Yardi bulletin notes that some of these secondary market cities made the list for Amazon’s HQ2 search recently (which we recently covered regarding local Indianapolis).
As for predictions, Jeff Adler said in his webinar that new supply would be what to watch in the next few years. He said that new supply may be evening out but isn’t declining as much as he’d anticipated, and some cities are at risk of over-supply, like: Denver, Seattle, Dallas, Phoenix, and Miami among others. He went on to say that in other areas, as demand exceeds supply, it will become even more important to find the right location in markets and submarkets. As he put it, over the next few years, the multifamily market would become “a sharpshooter’s game.”
The BAM bottom line: Yardi Matrix Veep and GM Jeff Adler views the current economy as doing very well, without many clouds on the horizon until a possible inverted yield curve in 2020-2021. Adler also notes that secondary markets are doing well currently, although that could change in any downturn. As supply/demand come into play more over the next few years, finding the right location will become even more vital.
