Over the next 10 years, it is estimated that approximately 16 million new households will have been formed due to the coming of age of millennials and Gen Xers throughout the United States. Based upon this projected growth in new household formations, there will be a demand for approximately 5 million new housing units, 3 million of which will be for new multifamily units.

There are several other additional demand drivers for new multifamily units such as the aging Baby Boomer generation looking to downsize; the preference for job mobility by millennials, the decline in the rate of homeownership due to the “Great Recession”; rapidly escalating housing prices and homeownership costs creating an affordability crisis; millennial and Gen X generation’s high student debt loads coupled with tough mortgage lending standards curtailing the ability to qualify for a home mortgage loan.

These trends as well as the declining new construction starts over the past few years due to rapidly rising construction and land costs; and the obsolescence of older properties, in addition to the rise in NIMBYism, point to the current multifamily stock in the U.S. being underbuilt by approximately 1 million units.

Due to the nature of shorter lease terms, Multifamily property investments also provide a hedge against inflation allowing for a faster recapture of rising costs through the increase in rents.