CREJ

Page 2 — Multifamily Properties Quarterly — November 2021 www.crej.com Letter from the Editor W hile the quarterly always highlights market trends, I found this issue’s focus on investment trends very illuminating. One topic I expect we’ll be cover- ing with greater frequency mov- ing forward is the shift in inves- tor appetite for build-to-rent and single-family rental properties. On Page 24, Kim Duty shares informa- tion about the uptick of investor demand for this property type and highlights renter demographics. One bit I found interesting was more U.S. house- holds (married and unmarried) with children rent single-family homes than rent apartments or own sin- gle-family homes. A report from RentCafé found that of the more than 100 suburbs that transitioned to a renter-majority population in the past 10 years, not a single one was in the Denver area. Wheat Ridge is the only sub- urb expected to transition to more renters than owners in the next five years, but there still is impres- sive growth in renter populations is several areas, the report states. Another report calculated it is now cheaper to rent than own in the Denver metro area, according to Realtor.com. If the monthly rental rate is cheaper than the average mortgage for a starter home (not to mention the down payment) and there’s room in the suburbs to build with cheaper land and more family friendly amenities, it makes sense that investors would see the appeal of amassing portfolios of these properties at a pace not seen before. Speaking of rents, there’s a lot of ink devoted to the topic in this issue. The Denver metro area saw the largest increase in quarterly rents ever in the third quarter, according to Apartment Insights. But as a couple articles in this pub- lication explain, rent growth and rent trends are trickier to dissect. Ron Throupe breaks down a hand- ful of reasons why on Page 8. Then, on Page 22, Glen Weinberg looks at what rapid rent increases have signaled in past cycles and sug- gests that rather than predicting a continued upward trajectory, it may be an indication of a slowdown or leveling off of real estate prices. However, we’ve heard this before – the shattering of records can’t go on forever. Erik Toll reminds readers on Page 23 that there were warnings of an imminent decline years ago, and yet, here we are. Instead of looking into a crystal ball, Toll examines past market cycles to address the investor strategy of only buying low and selling high. Spoiler alert: A fictional investor with the worst market timing doesn’t make out so poorly going against conventional wisdom. Michelle Z. Askeland maskeland@crej.com 303-623-1148, Ext. 104 Following investor dollars Contents 4 6 8 10 12 14 18 20 22 23 24 25 26 27 28 29 30 31 Post-pandemic market & affordable rents changes Scott Rathbun and Cary W. Bruteig Biannual survey results reflect market acceleration Jake Hallauer Understand the data behind rent tracking statistics Ron Throupe Northern I-25 corridor submarkets come into focus Mike Elliott Mile High City apartment metrics reach new heights Adam Riddle A 2021 recap of lending & what to expect in 2022 Chris White Goldilocks and the 3 fundamentals of real estate Kevin Brinkman Looking ahead: Things investors should monitor John Blackshire Large rent increases could signify cooling market Glen Weinberg Re-evaluating the ‘timing the market’ strategy Erik Toll Capital eyes single-family build-to-rent assets Kim Duty Core plus assets offer solid investment opportunity Christian Garner The golden ticket: Finding hidden yield in rentals Emir Dukic A perfect positive storm for the multifamily market Nathan Sciarra Renter trends: Small cities are best for living large Alexandra Ciuntu A blueprint for transformational, affordable change Jack Aronson Collaboration needed for aging adult housing crisis Greg Glade Precaster’s role begins early for parking projects Kevin O’Connell