I was in the backyard of Ed Peckham, the Dean of Students of Cal State Northridge. He had invited me over with a few friends for a BBQ. Ed was probably in his sixties and I in my twenties. I remember telling him I had no idea how I was going to be able to ever afford a house. 

“Oh you’ll afford one, someday” Ed said to me. He seemed so reassuring, like he saw in me the drive he had, to do life intentionally, with purpose. I eventually purchased a home in Los Angeles, and then with the equity I built up, I began investing in multifamily properties. 

Coincidentally about four years ago, my married daughter said the same to me. “Oh you’ll afford one someday,” I said, picturing myself sitting with Ed twenty plus years ago. 

Recently I was scrolling through social media, entertained by various news and investment content and I came upon two maps: 2020 and 2023. I was quite taken.

In 2020, in the majority of the country, it was cheaper to buy a new home than to rent a home of the same size in the same neighborhood. Surprisingly, in just three years this reversed, and we see that now it is much cheaper to rent a home than it is to buy one!

My experience confirms this has happened.

The demand for multifamily housing is climbing.
Occupancy in our investors’ multifamily properties are rising to full capacity.

What does this tell me?

From an investing perspective, multifamily properties have strong potential, as more residents decide to remain as tenants for a longer period of time. Plus, when capacity fills, then the supply and demand drivers for nicer units will push rental rates higher to catch up to market rates. Overall these dynamics strengthen the property value that could result in a higher-than-expected exit or disposition.

Is it bad news for homebuyers? No, not necessarily. You’ll afford one someday!

Is this good news for investors? I think it’s a great market indicator of potential returns in the multifamily real estate sector.

Today, the company I work for and invest through is Wilkinson. Wilkinson has completed over $3.2 Billion in real estate transactions since 1991. I was impressed when I learned Wilkinson’s average returns over the last 30+ years in multifamily are 25% Average Annualized IRR on all full-cycle multifamily funds net of fees since 1991.* Plus, I really like how they make multifamily investing possible for me without the headaches of having to manage my own property.

Before I sign off I’d like to give a shout out to my daughter and her husband who purchased their first home in 2023! Their “Someday” arrived. They have the drive to do life thoroughly, and with purpose, which places them among The Accredited™ like you and I.