Apartment supply increases, demand slows

Apartment supply rose during the third quarter.

The multifamily market boomed since the recession, making many property management companies experience an improved bottom line. However, according to real estate reporter Diana Olick, the gains in demand have settled due to a large number of new multifamily units.

During the third quarter, the national apartment vacancy level dropped to 4.6 percent from the previous quarter's 4.7 percent, Olick wrote in a blog post for CNBC, citing statistics from Reis. This was the smallest improvement since recovery started.

"Demand for apartments still clearly outstrips supply growth, with absorption figures higher than construction, and vacancies declining," said Victor Calanog, economist for Reis. "Still, there is cause for concern in the near-term that demand is abating for multifamily, just as a veritable avalanche of new projects begins to open their doors early next year."

Despite the smaller decline in vacancies, a sizable group of industry experts still think there will be improved levels of multifamily demand in the next several months, Olick added. This is because more younger consumers prefer renting, and many people who would buy homes don't have the credit to take out a mortgage.

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