As Chairman, Mr. Cisneros is committed to generating returns for CityView’s investment funds by building residential stock to support the nation’s new urban economic engines. Prior to establishing CityView, he served as Secretary of the U.S. Department of Housing and Urban Development and was the four-term Mayor of San Antonio, Texas.
Builder and Developer:
What are some current multifamily housing trends?
Homeownership rates have been dropping steadily since 2008 and now stand at about 65 percent. Every one percent drop in the rate represents 1.1 million households that have to live somewhere else, and that means rental housing.
There is a notable trend toward new economic generators in urban areas, which are driving the new American economy and are magnets for professionals of all ages. Our country needs to provide top quality housing for this workforce, not only through new development but also by upgrading existing buildings and incorporating new amenities. These urban developments are often located near transit and employment centers, with reasonably priced units characterized by modern amenities and smaller floor plans.
It is also clear that we need more affordable rental units. The demographic pressures of college graduates entering the workforce and new immigrants from around the world are increasing the demand for new affordable workforce housing.
Why is the multifamily segment important to the housing industry as a whole?
If the current rate of homeownership holds steady, then more than one-third of American households will be renters.
Multifamily is important because demographic, economic and transit patterns all contribute to an increase in rentals. For the next few years, the rental sector will drive a disproportionate share of new job growth in the development industry and new construction. The sooner we bring multifamily back to full production, the sooner we will see not just the revival of the housing sector, but a positive impact on the national economy as well.
Multifamily is also important because it speaks to changing lifestyles in today’s economy. Jobs are no longer permanent — they require more mobility, with shorter tenure and faster turnover. People have to be able to change jobs and cities without having to sell property each time.
What regions are you seeing the most multifamily activity? Why?
In the short run, most activity is in the gateway urban centers that have the strongest economies — such as the Bay Area; New York; Washington, DC; Boston and Seattle – and in economic engines like the Texas “Triangle” of Houston, Dallas and San Antonio. Denver and Phoenix in the west also seem to be rebounding faster in multifamily than single family.
However, in the next few years we are likely to see multifamily construction increase significantly in heartland cities with strengthening economies, such as Nashville, Minneapolis, Chicago, Columbus and Indianapolis. These cities have been slower in multifamily production in recent years, which means that they are not overbuilt.
What advice do you have for other builders/developers in the multifamily segment?
Try to understand the underlying fundamentals of the economic and demographic changes occurring in our country. These include the aging of the baby boomers, a new generation of tech-savvy people entering the workforce, massive economic shifts, energy-related change and increased environmental awareness. There are also trends in student, senior housing and housing for emerging populations, such as the Latino community. Thoughtful builders will develop products that meet the diverse needs of these groups, from locations to options to floor plans.
In addition, there is a shift in the way we build structures to incorporate and accommodate new technologies. Multifamily developers need to understand the way these changes apply to lifestyles and residential products. They must build to the times.
Where do you see multifamily housing going in 2013?
Multifamily should be strong in 2013 and beyond. There is concern that the sector may experience oversupply because of its strength, but the economic and demographic factors are powerful and production has been slow, so it will be some time before supply matches demand.
I just completed service on the Housing Commission of the Bipartisan Policy Center, a panel charting housing policy after the crisis. The Commission’s recommendations touch heavily on multifamily – noting that the housing finance system must include continued liquidity for the construction of multifamily and calling for rebalancing governmental investment from a predominant focus on homeownership to generate needed rental housing.
I am convinced that we are beginning a period of renaissance in many American cities and that apartments will assert themselves as an essential element of the housing stock in these cities for the long run.
Jeffrey A. Slavin is chief executive officer of HomeAid America and has been involved with HomeAid for 14 years. He may be contacted at firstname.lastname@example.org.