LATHAM, N.Y. >> The main ballroom inside The Century House was filled with more than 200 stakeholders Friday morning for a multifamily market panel discussion.
Experts in real estate, commercial banking, and the regional and national economy answered timely questions about the state and fate of the real estate market for multifamily housing in the Capital Region.
The event, hosted by the Center for Economic Growth, Hugh Johnson Advisors, SEFCU, the Albany Business Review, and Sunrise Management & Consulting, also released the results of the 2018 Sunrise Management & Consulting Multifamily Rental Market Report.
Although the report surveys data from seven states in the Northeast, the Capital Region panel focused on data and implications for Albany, Schenectady, Rensselaer and Saratoga counties. Sunrise has completed the survey annually since 2001 and is available for download on the company’s website, www.sunrisemc.com.
Experts said the Capital Region picture remains strong in 2018.
“We’re still seeing high valuations on multifamily units,” said Jennings.
Experts also noted how the Capital Region rental vacancy rate is low compared to 7.0% nationally in quarter 1 of 2018 (U.S. Census Bureau). “Regardless of what is going on nationally, the vacancy rate in the Capital Region has generally stayed between 4 and 6 percent,” said Jennings.
Rental housing in particular continues to respond to economic development with the utilization of more executive apartments in the area of Global Foundries in Malta, Kennedy pointed out, and an influx of renters in Rensselaer County — particularly Troy — as video game companies have grown and Regeneron has expanded to three facilities and 2,500 employees by the end of this year.
“Companies need low-cost or affordable housing to attract and keep talent, and we still have that,” Kennedy said.
While affordable rental rates are good for renters, suppressed rates of increase are not a good sign for the rental housing market, they said. The 2018 report shows that the rate of increase in rental rates has slowed considerably in these Capital Region counties, after peaking at different times in the past three years.
• Albany County dropped to .9% after a rally last year of 4.7% and has declined overall from 6.2% in 2015.
• Saratoga County continued to slow to 1.5% after a sharp drop-off from 10.6% in 2015.
• Rensselaer County slid to 1.9% from a high of 3.0% in 2016.
• Schenectady County is still holding fairly strong at 3.7%, peaking only last year at 6.9%.
The survey reflects market rate communities with no income or age restrictions and does not include student housing. The Capital Region data is from 175 properties representing 32,661 units.
“The data indicates that the market is getting saturated,” Holland said. “Everyone wants to know if the time to build more apartments is over, or if the economy is going to take off.”
Johnson said he has studied the state and national economy and shared his forecast.
“Although we will continue to see growth in 2018, driven largely by tax cuts, we are approaching the end of a very long bull market,” he said. “My work shows that we will peak out in late 2019. New home sales are going to start to decline in 2019, and the growth rates of all variables — new and existing home sales, including building permits, a leading indicator of the national economy — are going to come down pretty sharply in 2020.”
Meanwhile, experts said that interest rates will continue to rise. “My educated guess is that they will get to the level at which any good news of corporate profits will be outweighed by the bad news of higher interest rates,” Johnson said.
“The incongruence is, when interest rates get too high for first-time homebuyers to get into a house, they rent,” Jennings added.
With the Capital Region rental market getting more crowded, Kennedy said that the mix of amenities is even more important to appeal to the unique desires of different age groups.
“Millennials want the live/work/play lifestyle which is achieved by living in cities near where they work. We’re lucky that we have a lot of urban revitalization, such as with the mill in Cohoes, and The [former] Record building in Troy. Older generations are selling their houses to move into luxury apartments,” explained Kennedy.
Johnson is forecasting that, by peaking in late 2019 and with most bear markets lasting only about 14 months, the nation will endure a recession into 2021.
“But a lot of it depends on the federal reserve and tax policy, and on what happens with Congress,” said Johnson.
At the end of the program, Holland presented an $1,804 check to the Homeless and Travelers Aid Society, which Jennings then announced that SEFCU would double the amount of the check from Sunrise Management & Consulting.