Taking into account factors such as employment, construction, vacancy rates, rents and investment, Marcus & Millichap constructs its annual National Multifamily Index as part of its 2019 Multifamily Investment Forecast.
The twin cities of Minneapolis-St. Paul climbed two spots to top the firm's index. It is the only Midwest market to break into the top 20, according to the firm. San Diego climbed into the second place spot, one of several California markets to sit near the top of the list. In addition Florida metros Orlando and Tampa-St. Petersburg posted the largest advances in this year’s index from last year's, jumping 11 and nine places, respectively.
According to the forecast:
Housing market remains tight as household formation accelerates. Steady job creation and exceptionally low unemployment will boost household formation in 2019, supporting a third consecutive year of national sub-5 percent vacancy levels. Much of the new demand will center on apartments that serve to the traditional workforce: Class B and C properties. Although new apartment completions will reach their highest level in more than 25 years with the delivery of more than 315,000 units, the new inventory largely caters to more affluent renters. As a result, Class A vacancy is expected to rise to 5.8 percent while Class B apartment vacancy remains relatively stable at 4.7 percent. The most affrdable segment of the market, Class C apartments, faces strong demand and vacancy for this segment is expected to tighten to 3.9 percent, its lowest year-end level in 19 years. These trends will support consistent rent gains averaging 3.7 percent in 2019, led by momentum in secondary and tertiary markets.
In the following gallery, we list the top 25 markets in Marcus & Millichap's rankings, including the firm's projections for employment growth, construction, vacancy rates and rents for 2019.