Areas with a true seller’s market – cities like San Jose, Calif., San Francisco, Austin and Phoenix – are seeing a surge in multi-family development because buyers are willing to rent while they wait for a more advantageous market.
In cities with a buyer’s market – such as Cincinnati, Cleveland, Providence, Jacksonville and Hartford, Conn. – multi-family developers are scared off by competition from the single-family housing market.
The trend runs against the conventional wisdom that rental apartments become more desirable in weaker housing markets.
- A seller's market coming out of a deep recession still doesn't afford potential buyers their down payments. Down-payment and credit-score requirements are both up after the huge laxness of the liar's-loan days.
- There are also more foreclosures to come, which will put pressure on the seller's markets.
- Lastly, there are generational differences. The "American Dream" isn't owning a house nearly as much as it used to. More young people want flexibility and to not worry about maintenance, etc.
The concepts behind the terms are shifting with the new reality. Pre-crash conventional wisdom doesn't work without tweaking the terms to fit the changing contexts.