Multifamily has been the hottest real estate property type over the past few years. Rents have risen more than 20% since 2011, property values have skyrocketed and construction has mushroomed since the trough of the last downturn.

So has the multifamily cycle run its course? Or are there still some good investment opportunities?

According to a recently published research paper by Santa Barbara, Calif., based Yardi Matrix, demand for rental properties is likely to remain strong over the next decade. Using data such as Census Bureau population projections and homeownership rates, the study forecasts that the number of rental households will grow by an average between 300,000 and 600,000 per year over the next decade. Currently, the amount of new construction nationally is at the low end of that spectrum, so unless there is a spike in supply, vacancy rates should remain low.

Yardi's study also breaks down the demand by age cohort and finds that it will be concentrated in the Baby Boomer and Millennial generations. Not only are those the largest age groups by number, but social trends such as smaller families, preferences for urban living and retirees downsizing will play a major role in the increase.

Despite the bullish forecast for demand, investors do have to be careful when identifying investment opportunities for multifamily properties. With property values at or near record levels, especially in core markets, it could be easy to overpay. Development must be calibrated to the right submarkets, on properties that are affordable and have the right amenities to attract the population as it evolves. That's why it is advisable to invest with experienced property owners and managers.

For more details, the study can be found at: