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Scotsman Guide: Q&A with Thomas S. Bozzuto, Chairman, National Multi Housing Council

July 01, 2012

Homeownership may be the American dream, but living in rental housing is today’s reality. According to the National Multi Housing Council (NMHC), nearly one-third of American households rent, and more than 14 percent of households live in rental apartments. We spoke with NMHC Chairman Thomas S. Bozzuto about his priorities for the council during his two-year term as chair, as well as his perspective on overall multifamily-market conditions.

What’s your outlook for multifamily?

At least for the next several years, the multifamily rental industry will continue to be strong and get stronger. As we have recovered from the recession, all over the country rents are up, occupancy is up. That has been driven more by the change in the ratio of renters to homeowners than anything else. There will be more of that. Furthermore, the Generation Y population, which has doubled up and which stayed in their parents’ basements during the recession, will be now entering — as they get jobs — the apartment market in force.

The biggest single risk [to recovery] is job growth. We need the economy to continue to recover. If that happens, we will continue to see growth in our industry.

Do current multifamily starts support the growing demand?

We will see the number of starts continue to increase over the next 18 months because the demand continues to exceed the supply on a national level. In 2010, we had the lowest number of starts in the past 50 years in the apartment industry. There is a substantial deficit of new supply in most markets.

What is the availability of capital for these starts?

For the most part, developers of substance — developers with experience in strong markets — should be able to continue to get capital and equity participation. There has been up until recently too much of a desire by the banks and the equity [investors] to be concentrated in perhaps half a dozen cities. Now that those cities are beginning to reach something that looks like equilibrium, the capital shall begin to become available for other, smaller markets in the country.

The big issue as it relates to capital is the future of the government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac. Ensuring their survival in some form, or at least an orderly transition from government support to private market, is absolutely critical.

What are your priorities as NMHC chairman?

My number one priority is to focus as much as we can on a continued supply of reasonable liquidity to the apartment market in light of the threats to the GSEs. Two, try and use the lessons learned from the economic collapse to reinforce the point we’ve long made that renting is a viable housing alternative and not to be denigrated by public policy. Third, continue to expand our voice on legislative and regulatory issues of concern to the industry.