CHC continues to see opportunity within the multifamily space due to a shortage in affordable housing and elevated home mortgage rates. The sector has faced recent headwinds in part due to increased deliveries. Compared to the 20-year average of 504,000 units under construction, 2023 represented a peak year for deliveries with 590,000 units and 2024 deliveries are estimated at 575,000. However, due to high construction and financing costs, new starts activity has declined and only 346,000 units are expected to be delivered in 2025. Furthermore, the disparity between homeownership and rental costs has reached $1,114, representing a 26.7% year-over-year increase and another demand driver for the sector.
Similarly, with the backdrop of high costs of homeownership nationwide, CHC believes manufactured housing provides a necessary option for growing segments of the population. There has been negligible new supply and strong demand growth in this sector. Currently, 17m Americans live in manufactured homes, a figure CHC expects to increase as growth in older households is anticipated to result in a more pressing need for accessible and affordable housing. In fact, manufactured home shipments have increased by over 35% from 2016–Q1 2024. Investment activity for manufactured housing communities has seen strong growth in recent years. Sales volume is up 55% in the last five years (2019-23) compared to the previous five-year period (2014-18). Additionally, the sector’s ownership remains largely fragmented with 81% of the existing stock owned by non-institutional firms.
The student housing sector has continued to prove its resilience. Leasing velocity, occupancy, and rent growth remain robust, with July 2024 preleasing data showing 89.2% occupancy and 4.7% rent growth at Yardi 200 universities, indicating a strong 2024/25 school year. CHC believes universities are central to America’s economic health, and often function as engines for the growth of surrounding communities and metropolitan areas. Most of the growth within the student housing market is projected to take place at four-year public universities, which have traditionally experienced the most sustained and reliable student population growth across institution types. Purpose-built student housing has demonstrated low correlation to economic cycles, highlighting the sector’s continued stability. CHC views the positive fundamental forecast for 2024 and beyond to be a bright spot among various commercial real estate sectors.
COMPLIANCE STATEMENT
The information contained herein is for illustrative purposes only and is intended for qualified investors and is not to be construed as an offer, solicitation, or recommendation with respect to the purchase or sale of any security and is not intended to constitute and may not be relied upon for legal, tax, or accounting advice. Investors should consult their legal, tax counsel, to determine which opportunity is best for their investment. The information shown is considered to be accurate as of the date of delivery or as otherwise indicated in the material, and CHC has no obligation to disseminate any updates or revisions to any information contained herein. Certain information in these materials may be deemed to constitute “forward-looking statements, which are necessarily based upon speculation, expectations, projections, and assumptions that are inherently unreliable and subject to certain significant business, economic, market, and competitive uncertainties and contingencies. Sources can be provided upon request.
