Relationship between Housing Demand and Supply Data
Home-ownership decisions impact the demand for space and should be considered in the context of the inventory of units in the housing market. Any decline in the home-ownership rate implies a drop in the number of owner households. The move from home-ownership to renting benefits the rental market and this increase in renters then flows both to single-family rentals and multifamily rentals.
Multifamily Demand Calculations
Total Housing Units = Total single-family (1-4) units + total multifamily units + vacant units
Single-Family Units = Total housing units – multifamily units – vacant units
Multifamily Units = Total housing units – single-family units – vacant units
Homeownership Rate = Homeowners / total households
Step 1 – Population Forecasts
EASI Demographics, Inc provides the legacy data which includes total housing units and forecasted housing units. This constitutes the universe of records and the baseline for determining housing demand.
Step 2 – Non-Multifamily Forecasts
Next, the single-family occupied units are subtracted from the total housing units providing the total renter qualified pool.
Step 3 – Vacancies
The number of vacancies must be subtracted from the total renter qualified pool providing the total gross demand for rental multifamily.
Step 4 – New Residential Building Permits
New residential building permits must be taken into account when considering a new multifamily development. New permits are reduced from the total gross demand arriving at total net demand.
Step 5 – Penetration Rate
The penetration rates are an empirical assumption derived from
Step 6 – Revenue Capture Opportunity Potential
New Multifamily Demand Conclusion
In this analysis, we investigated the relationship between economic trends and the rental market at the national level, assuming no housing policy changes. Based on our framework that focuses on the entire residential market, we developed an indirect approach to forecast future home-ownership and new multifamily demand. The analysis considers the impact of single-family rental units on the multifamily rental demand.