The trouble with money these days is that it often moves faster than there are right ways to spend it.
That said, we see a big risk for a capital-challenged majority of multifamily industry players in the community's completely obsessive focus on the claim that "apartments are America's affordable housing."
Again, the problem is one of velocity.
Multifamily industry leaders may in fact have a valid point that apartments—from various vantage points, including the very important one where households, companies, localities, nationalities, and continents are in a massive mode of deleveraging from the crush of debt—are a more sustainably affordable solution to housing Americans. Renting saves a household a truckload of up-front costs, taxes, and a number of other monthly obligations that go with the homeownership turf.
For more than one in three households, renting is the right thing, and will be.
But that's a point that may become hollower and hollower. The reason?
Simply put, a more affordable solution to housing Americans may not be the solution Americans pick.
What, after all, do you make of all the CoreLogic data that say that homeownership is less expensive than renting in 98 of the largest metropolitan areas?
Thing is, for multifamily right now, capital's impetus is on autopilot, running faster than there are sound, sustainable, strategically mapped new multifamily communities headed to go in the ground.
Meanwhile, revenue management, like lightning in a bottle, is stretching rent tolerance points to their elastic limit and beyond, in some cases, already. Remember, household incomes are growing, but only in broad brushes, as this New York Times article shows—most of the income increases gained since the downturn have gone to the wealthy, not to the 99 percent.
All this as a way to say, "big data" may be mission critical to resetting the Average Joe multifamily businesses to where they can become more than a "lumpy" business model. But revenue management needs a very human dimension to work as a checks-and-balances system, just so that the algorithms don't "kill the golden goose" of consumers needing America's affordable housing to actually be affordable.