Fundamentals for the multifamily housing sector remain firm, even as new construction comes onto the market. Vacancy rates remain at their lows for the cycle, and rent growth has firmed.

Going forward, we anticipate that the pent-up demand for apartments is likely to continue to bolster household formation, which is the ultimate source of demand for multifamily housing (see attached presentation for slides on historical trends in household formation and estimates of the level of pent-up demand).  With job growth gaining momentum in 2014, demand is likely to meet or exceed new supply for several years into the future.  This will keep vacancy rates low and support rent growth and valuations.

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