Housing data released late last month by the U.S. Commerce Dept. confirmed Fitch Rating’s expectation that the housing market continues to gain traction, which the ratings agency believes could increase the likelihood of moderating multifamily demand growth.
Housing permits, a proxy for future construction, were up 27% and 4% higher on a year-over-year and quarter-over-quarter basis, respectively, for November 2012. Building permits in November 2012 were at a seasonally adjusted annual rate of 899,000.
In a report issued earlier in the month, Fitch estimated that 80% of the growth in demand for multifamily properties from 2009-2011 could be attributed to the decline in the home ownership rate.
Looking forward, Fitch said it expects decreasing rent affordability for apartments and the increasing relative/absolute attractiveness of home ownership will cause multifamily demand and operating fundamentals to more closely track economic growth.
Commerce Department’s latest data seems to support Fitch’s expectation — at least that a recovery in housing is underway.
Fitch said it expects multifamily demand growth to ebb from current levels; however, Fitch does not anticipate a material retreat.