Pretium’s Housing Insights, February 2023

INSIGHTS

Pretium’s Housing Insights, February 2023

February 28, 2023

Summary

Single-family and multifamily supply outlooks have diverged meaningfully.

It will likely take much longer to absorb multifamily vs. single-family units under construction.

During the pandemic, both single-family and multifamily construction climbed in response to strong home purchase and rental demand. The contraction in construction over the past nine months has played out differently, with single-family construction falling sharply while multifamily construction has been much slower to react. As of January, single-family starts have been falling for a year and are already down 35% from their pandemic peak; on the other hand, multifamily starts were still reaching new multidecade highs in November1. The differing trajectories are partly driven by the inherently greater flexibility of single-family homebuilding where each unit is started independently vs. multifamily projects where all units in a structure are started at once. Also, single-family projects typically have shorter timelines and are less complex compared to multifamily projects2. Finally, since 95% of singlefamily homes are built for homeowners, their rate of building is especially sensitive to changes in consumer behavior and mortgage rates; on the other hand, 94% of multifamily units are built for investors who have longer-term time horizons3.

The difference in trajectories of single-family vs. multifamily construction has important implications for the rate at which construction backlogs are likely to be worked down. The number of housing units under construction reached record highs during the pandemic driven by the synchronized surge in home purchase and rental demand. The sharp contraction in single-family construction means that as of January, the pace of single-family completions is 45% higher than the pace of new single-family units being permitted1. As shown in Exhibit 1, single-family construction backlogs have been falling since mid-2022 and at their current pace of decline will be back at pre-pandemic levels by mid-2024. By contrast, multifamily construction backlogs are still rising since multifamily permits remain 70% higher than multifamily completions. As shown in Exhibit 2, multifamily construction backlogs are approaching their all-time highs of 994,000. Even if multifamily construction backlogs began to decline immediately, Pretium estimates that it could take until mid-2026 for multifamily construction backlogs to return to their pre-pandemic levels.

As described in Pretium’s November 2022 Housing Insights, we believe that supply-demand imbalance will remain a central driver of US housing market dynamics4. Elevated construction pipelines aren’t enough to resolve a supply-demand imbalance that measures in the millions5; however, they do represent both an investment risk and opportunity as developers work their backlogs down. Over the next 12-18 months, we expect single-family homebuilders to continue to be proactive in working to reduce their construction backlogs, but not in a manner broadly disruptive to single-family home prices. The multifamily outlook is cloudier given the continued momentum of construction and the potentially long period over which it will be resolved.

Exhibit 1

Exhibit 2

Source: US Census, New Residential Construction, as of January 2023.

Want more Housing Insights from Pretium?: Increased long-distance migration persisted in 2022

This is not an offer, advertisement, or solicitation for interests in any Pretium managed vehicle and should not be construed or relied upon as investment advice or as predictive of future market or investment performance. Past performance is not indicative of future results.


1. US Census, New Residential Construction, as of January 2023.
2. NAHB, “Slightly Longer Time to Build Apartments in 2021”, July 7, 2022 and “How Long Does it Take to Build a Single-Family Home”, September 30, 2020.
3. US Census, “Quarterly Starts and Completions by Purpose and Design”, as of 3Q22.
4. Pretium Housing Insights, “The US is already underbuilding again, worsening the long-term supply shortage”, November 2022.
5. Pretium White Paper, “The US Housing Shortage”, October 26, 2021.

Pretium Announces Promotions to Managing Director, Highlighting Firm’s Emerging Leaders

PRESS RELEASE

Pretium Announces Promotions to Managing Director, Highlighting Firm’s Emerging Leaders

February 13, 2023

NEW YORK – February 13, 2023 – Pretium, a specialized investment firm with more than $50 billion in assets under management, today announced its 2023 promotions to Managing Director, effective January 1, 2023.

“The promotions announced today highlight our deep bench of talent across the organization, our leaders’ diversity of background and thought, and the important work underway at Pretium,” said Don Mullen, Founder and CEO of Pretium. “We extend our congratulations to our emerging leaders, and we look forward to benefitting from their contributions as we continue to build our diversified investment platform and enhance our capabilities.”

The following individuals have been promoted to Managing Director:

  • Michael Polsinelli, Finance
  • Genie Pusey, Business Development
  • Steve Satriano, Finance
  • Daniel Sikora, Residential Credit
  • Nishu Sood, Real Estate Research & Analytics
  • David Stolldorf, Capital Markets
  • Cheryl Zabala, Legal & Compliance

 

About Pretium

Pretium is a specialized investment firm focused on U.S. residential real estate, residential credit, and corporate credit. Pretium was founded in 2012 to capitalize on investment and lending opportunities arising as a result of structural changes, disruptions, and inefficiencies within the economy. Pretium has built an integrated analytical and operational ecosystem within the U.S. housing, residential credit, and corporate credit markets, and believes that its insight and experience within these markets create a strategic advantage over other investment managers. Pretium’s platform has more than $50 billion of assets, comprising real estate investments across 30 markets in the U.S., and employs more than 4,000 people across 30 offices, including its New York headquarters, Dubai, London, Seoul and Sydney. Please visit www.pretium.com for additional information.

Contacts

Jon Keehner / Kate Thompson / Lyle Weston
Joele Frank, Wilkinson Brimmer Katcher
212-355-4449
Media-SFR@pretium.com

Emily Stecher Joins Pretium’s Growing Business Development Team

PRESS RELEASE

Emily Stecher Joins Pretium’s Growing Business Development Team

February 7, 2023

Stecher Bolsters Pretium’s Product Development and Capital-Raising Capabilities

NEW YORK, February 7, 2023 – Pretium, a specialized investment firm with approximately $50 billion in assets under management, today announced that Emily Stecher has joined the firm as Managing Director and Chief Operating Officer of the Business Development team. In this newly created role, Ms. Stecher is responsible for bolstering the firm’s product and strategy creation, as well as optimizing client engagement efforts.

Ms. Stecher brings extensive experience applying exceptional business and financial acumen for diverse funds and investments. Prior to joining Pretium, Ms. Stecher held roles of increasing responsibility at Goldman Sachs, where she most recently served as Managing Director, Head of U.S. Wealth Management Alternative Sales, and was responsible for distributing alternative investment products to US-based financial intermediaries. Previously, she was a Vice President, Head of Product Strategy & Development and a Vice President in the Alternative Capital Markets group at Goldman Sachs. Ms. Stecher began her career as a Management & Strategy Analyst in Goldman’s Private Wealth Management business. During her tenure at Goldman Sachs, Ms. Stecher oversaw a broad range of activities, including managing a multi-billion-dollar annual budget, developing and executing on new business opportunities for GSAM alternative investment funds and directing a secondary private equity program for clients.

“At Pretium, our entrepreneurial spirit and steadfast commitment to unlocking value for our stakeholders set us apart,” said Lee Alexander, Senior Managing Director and Chief Operating Officer at Pretium. “As we continue to expand the exceptional team we have in place, Emily’s significant experience stewarding diverse strategic initiatives will be an invaluable asset as we enhance our platform and capabilities.”

“Emily is a dynamic leader, and we are thrilled that she’s joined the Pretium team,” said Jennifer Strickland, Senior Managing Director and Head of Business Development at Pretium. “Her background and direct and insightful approach make her the perfect fit for Pretium, and I look forward to working with her to advance our product development and capital raising capabilities, while continuing to optimize how we engage with clients.”

“Pretium is a unique firm on a remarkable growth trajectory, and I am excited to join a team of innovative, specialized professionals,” said Ms. Stecher. “I look forward to supporting the firm’s mission and success by identifying new products and further opportunities to deliver tailored solutions for Pretium’s stakeholders.”

About Pretium

Pretium is a specialized investment firm focused on U.S. residential real estate, residential credit, and corporate credit. Pretium was founded in 2012 to capitalize on investment and lending opportunities arising as a result of structural changes, disruptions, and inefficiencies within the economy. Pretium has built an integrated analytical and operational ecosystem within the U.S. housing, residential credit, and corporate credit markets, and believes that its insight and experience within these markets create a strategic advantage over other investment managers. Pretium’s platform has more than $50 billion of assets, comprising real estate investments across 30 markets in the U.S., and employs more than 4,000 people across 30 offices, including its New York headquarters, Dubai, London, Seoul and Sydney. Please visit www.pretium.com for additional information.

Contacts

Jon Keehner / Kate Thompson / Lyle Weston
Joele Frank, Wilkinson Brimmer Katcher
212-355-4449
Media-SFR@pretium.com

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June 2022

Pretium’s State of ESG Report

Read here to learn more.