Total U.S. multifamily demand should rise by two million units over the next decade. 

CBRE Econometric Advisors’ latest long-term outlook for U.S. multifamily rental housing indicates the net gain in occupied units—from 15.4 million in Q2 2020 to 17.4 million in Q2 2030—represents an 11.6% demand increase in the 66 metro markets.

The new demand will bolster multifamily’s dynamic investment environment and create new opportunities for buyers of all types. It will create significant opportunities for developers. Steady increases in demand over the decade will generate revenue for large-to-small multifamily property owners across America.

The outlook assumes tepid market demand into early 2021; a year of recovering demand following that, and steady gains thereafter. The favorable long-term outlook should help owners and operators to weather the current storm, knowing that the sector’s COVID-19 challenges will be relatively short term and more promising conditions should be sustained after that.

While outlook favorable, demand growing at slower pace

The long-term outlook suggests a slight moderation from the last decade. The demand totals are roughly the same, but growth rate was higher in the past decade. From Q2 2010 to Q2 2020, U.S. multifamily net absorption totaled 2.0 million units, an increase of 15.1% compared to the projected increase of 11.6% for the upcoming decade.

While the drivers of multifamily demand going forward will be similar as those in the past, many will not be quite as dynamic.

Secular headwinds slowing demand growth going forward

Short-term forecasts are largely based on expectations for future economic performance (cyclical forces). Household formation rises and falls with the health of the economy, and multifamily demand is created from household formation and housing choice. Yet, longer-term outlooks are more dependent on secular trends. In the latter category are three trends that will moderate future demand.