MFH Units coming online. By seeing the pipeline you can sort of see new trends in saturation and possibly see a top in the market and downward pressure on Class B and C MFH. What are other data sources you use?
I think the middle rents market with clean apartments but yet still affordable will be in most demand during all cycles.
When cycle is robust and top incomes rising everyone builds class A. When down turn happens they want to move down in cost to save money. This makes class A vacancy rise and rents flatten as too much product and lessening demand.
Very small percentage of renters want to live in the bad areas or run down apartments in good areas. So that leaves the middle market buildings. Area not excellent but not too bad either. Place is clean and rents are affordable but not the slums.
So people ask themselves in tough times where can they live that is affordable but still nice and in a good area? Those are usually the properties to own in any cycle.
Here in Los Angeles we have seen some overbuilding in Class A buildings, particularly in the downtown area. In fact, absorption has slowed and leasing has slowed. Rent growth has slowed which lends people to believe that we are getting towards the top of the market. Like @Joel Owens said, there will always be demand for Class B apartments no matter where we are in a given real estate cycle. In places like Los Angeles - vacancy rates are around 3% - there is not much room for additional downward pressure on Class B. Class C properties might experience some pressure from those in B- properties who are willing or forced to move to Class C.
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