As the housing market begins to recover, multifamily REIT executives say they aren’t worried about competition from the single-family market.
REIT executives discussed the latest developments in the housing market as part of a Nov. 13 panel at REITWorld 2012: NAREIT's Annual Convention for All Things REIT. The panel, which was moderated by Andrew McCulloch, managing director with Green Street Advisors, included William Bayless, president and CEO of American Campus Communities Inc. (NYSE: ACC); Terry Considine, chairman and CEO of Aimco (NYSE: AIV); Daniel Fulton, president and CEO of Weyerhaeuser Company (NYSE: WY); and Timothy Naughton, president of Avalon Bay Communities Inc. (NYSE: AVB).
Considine speculated that the impact of the housing recovery on the job market may have a greater impact on the multifamily sector than any kind of competitive effects.
“A strong single-family recovery is good for job growth and multifamily," he said. "As it recovers, it can be an important boost for the economy.”
Considine added that the decline in the attractiveness of owning a home versus renting reflects what he thinks is a longer-term trend away from home ownership.
Naughton said both the single-family and multifamily sectors can coexist and added that many have forgotten what a "balanced" housing market looks like.
“It’s hard for me to paint a picture of how a housing recovery is bad for apartments,” he said.
Fulton, owner of a timber REIT with a home building division, also agreed that a housing recovery can be good for both the single-family and multifamily market. He said he doesn’t see one as a threat to the other. However, Naughton and Fulton both added that the country may be facing a housing shortage for those specifically looking for homeownership.
“There’s not a lot of single-family inventory to choose from," Fulton said. "Resale housing is down, and new inventory is very low."
American Campus focuses specifically on campus housing, which Bayless said eliminates any impact from the housing recovery. He added that student housing is a “constant stream through the economic cycles.”
Bayless said one of the keys to the company’s success has been diversifying within its campus communities so that every price point can be served. Additionally, Bayless added that social media plays a large role in American Campus' communities.
“Social media is now our main means of communication in terms of leasing and communication,” he said.
Naughton agreed that social media is an important component of AvalonBay's interaction with residents, adding that nearly every one of its apartment communities has a Facebook page.