Aging boomers, struggling millennials, and the high cost of new buildings in the northeast all mean this is a great time to get into the multi-family property market.
We know that multi-family properties are a great investment, and should be the first property you purchase BEFORE your single-family home or condo. But did you know that they are a great long-term investment as well? Several economic indicators point to good things over the next 20-30 years for owners of multi-family properties and apartment buildings.
Reason #1: 75 Million Baby Boomers are Headed into Retirement
By 2020, nearly 17% of the entire US population will be over 65. While many may have planned on buying a home in the Sunbelt or Florida, the financial crises of the mid-2000’s took a significant piece of their retirement income.
Lisa Marsh Ryerson, president of AARP Foundation cited a recent report: “Right now, more than 19 million older adults live in unaffordable or inadequate housing, and that problem will only grow worse in the next two decades as our population ages,” says Lisa Marsh Ryerson, President of the AARP.
This means they are likely to be downsizing from their existing homes and that often means they will be looking for an apartment to rent. Particularly those buildings being which are being converted to accommodate the aging population with handicap accessible features.
Reason #2: Many Millennials aren’t Buying Homes
Millennials (age 25-34) are an age group that who may have been traditionally in the housing market for a single-family home. However, record levels of debt from student loans and high-interest credit cards, combined with higher housing prices and lack of inventory mean that the Millennials generation will be putting their money into renting rather than buying for the foreseeable future.
One recent study showed that in 2004 – the 23-34-year-old spent 9% of their monthly spending on renting and 11% on homes they owned. In 2015, they spent 12% on rental properties and only 8% on buying a home. That’s a significant turnaround (and opportunity if you own r
Reason #3: It’s Getting More Expensive to Build New Apartment Units
In densely populated urban areas with established housing markets like Essex County, the cost to build new apartments is skyrocketing. A 2014 survey by RSMmeans Data suggested that the cost per square foot in New York City was $232.14, while the average was somewhere around 178/Square foot. Even in Charlotte, one of the lower-priced markets, prices have jumped from 95,000 to build per unit in 2010 could cost as much as $150,000 in 2017.
Want to Know More?
We’ll be holding free first-time home buyers seminars throughout the year to help answer all your multi-family property questions. Space is limited, so please click the link below to find out when our next event will be or call our office at 617 212 3251.
Register below for our free seminar.
LOCATION: 40R Merrimac St. Newburyport
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DISCLAIMER: The data and information on our website are merely our opinions and should not be construed as advice or counsel on financial or legal matters.