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  • Writer's picturejameyc

From a Second-Tier Asset Class to King of the Hill

Updated: Aug 25, 2020

August 5, 2019

In an Article written by Jim Boyle titled “From a Second-Tier Asset Class to King of the Hill”, published in the Trepp Talk, dated July 16, 2019, Boyle lays out his rationale for the current and projected future high demand for multifamily ownership. His research is highlighted below.

Multifamily loans now account for 40.3% of commercial mortgages, up from 22.7% in 1994.

Numerous factors have driven the growth:

Population growth:

  • 264.4M in 1994 (US Census Bureau)

  • 325.7M in 2017 (US Census Bureau) – an almost 23.2% increase


Lower home ownership rate:


Housing stock has not kept pace with supply:

Housing only grew 20% from 1994 to 2017

  • 1994: Housing inventory was 112.7M, with 35.2M (31.2%) being rental units

  • 2017: Housing inventory was 135.7M, with 43.3M (31.9%) being rental units

  • Housing inventory only grew by 23.0%, while population grew by 23.2% and the percentage of renters increased by 5.0% of total population

  • Freddie Mac has determined that 370,000 fewer apartments were delivered annually than needed to meet housing demand between 2008 and 2017

Strong liquidity due to GSE lenders and the evolution of the CMBS market


Craig Black and Scott Nurski of NAI Wisinski Great Lakes concur wholeheartedly with Boyle’s research and assumptions. The information he provides is well substantiated. Investors continue to clamor for this asset type. Low interest rates and readily available capital from investors indicate that sellers should benefit greatly. His data leads one to conclude that opportunities for new development are also available in most markets. The full article is provided in the link below:

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