What do you think about the author\'s contention that Multi-family demand should

Question

What do you think about the author's contention that Multi-family demand should increase? How does tax policy inform your choice? What if the deduction for home interest would be eliminated?

Is Growth in the Multifamily Sector Sustainable? Nov. 13, 2013By Michael Bul The multifamily market, the so-called darling of commercial real estate, isn't losing that title any time soon. The third quarter demonstrated once again how stable the sector is, as occupancy held steady and rents continued to rise, albeit at a more normal pace. Those were a few of the points made during the most recent episode of the "Commercial Real Estate Show." My guests and I discussed the factors affecting the sector, property-level performance expectations and investment strategies for this point in the cycle. Millennials enter the job market The continuously improving economy and job market are sustaining the multifamily market's success. "The people who are getting jobs are the young professionals that typically rent an apartment instead of buying a house," said Ernie Eden, vice president of Bull Realty's Apartment Group. "Demographics are the key factor driving the multifamily market," said Jay Parsons, national market analysis manager for Real Page Inc. "The Gen Y Millennial renters will eventually buy homes, but not until later. They are getting married later and prefer the mobility that living in a rental gives." A large pipeline of upcoming college graduates will soon be looking for apartments as well, Parsons added. "Apartment demand should be strong during the next decade due to strong demographics." More normal occupancy and rent growth The multifamily market is on pace for a similar year to 2012 in terms of absorption and rental rates, Parsons said. In the third quarter, 47,000 units were absorbed nationwide for a year-to-date total of 163,000, he added. Rent grew by 1.1 percent quarter-over-quarter for total rent growth of 3.2 percent year-to-date. "We are getting back to a more stable multifamily market," Parsons said. "We are going from a peak market to a more normal growth pattern." While class-A properties lead the way coming out of the recession, class-B properties are experiencing an uptick in rents as well, he added.

Explanation / Answer

In recent years Multihomes have become one of the best choice among the youngesters. Multi homes are those where one or more families staty together may be in a group of buildings. These are becoming more and more famous among the youngesters in the recent years because the reason may be the affordability or the risk bearing capcity of the individual.

Analysing the situation given in the case above the increase in the job market and the opportunites increasing has improved the financial status of the people which has increased the demand for these categories of the houses. The other main reason for the increase demand for multihouse family is demographic as people look at this as the more mobile and can change the houses basis their requirement. For example if people get married to people living in other areas then these type of houses will help them in changing the houses.

And now the facilities for suburban multifamily houses are also very good and convinient to commute to market place or work place. And they get people in touch with each other in one place. Hence lot of importance given to multifamily house.

Under Income tax the interest on the loan aganist property gives deduction from the income which in turn reduces the tax burden on the people. But If the interest on the loan is not allowed as a deduction from income under income tax then people will not go for a own house.

This will even more increase the demand for the multi house family on rent basis than to purchase for their own.

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