Could multifamily housing be the next bubble?

Bob Aumiller, president of MacKenzie Commercial Real Estate Services LLC, is the latest real estate expert to voice concern about the multifamily housing market in the Baltimore area.

He brought up the topic during an interview about the impact recent state jobs reports are having on commercial properties in the Baltimore metro area.

“My biggest concern would be in the multifamily sector. People need to have jobs to rent, and there seems to be a tremendous amount of apartment conversions and new construction in that arena. I think that could be the next issue that we face,” Aumiller said.

Earlier this year David Tufaro, founder of Terra Nova Ventures LLC, a Baltimore-based development company, also expressed concern about the amount of multifamily units being built in Baltimore.

“I do think we’re in a bubble in Baltimore city,” Tufaro said at the time.

Concerns about the stability of the multifamily market are coming to the surface just as Baltimore is set to encourage more apartment building by creating a citywide 10-year tax credit. The credit would be available for developments that create a minimum of 20 market-rate units. The bill creating the tax credits faces a final vote in July.

Earlier in the year, Mayor Stephanie Rawlings-Blake, who proposed the tax credit during her State of the City address, dismissed the idea that increased building could lead to a bubble.

“In at least in the downtown area, the residential market can’t keep up with demand. And because of that lenders believe that it continues to be a good investment to do conversion projects,” Rawlings-Blake said. “If that were to change, and the vacancy rate were to increase, it would become less attractive for investment, and you know, that’s where the market balances it out.”