Equating the Department of Commerce and HUD definition of multifamily with rental apartments is a common error that repeated itself in spades last week. It’s convenient to assume the two numbers are not far apart. But the assumption does not hold over time. Nor is it a random walk.

How much of multifamily construction is attributable to apartments? Starts peaked at 95 percent of multifamily units in the second quarter of 2011. With few projects targeting the ownership market getting underway during the housing crisis, rental completions are only just coming off their cyclical high.

The pendulum swings in both directions, even if the center has edged closer to rentals. In the latter days of the housing boom, apartments’ share of multifamily starts reached their nadir at less than half of all new projects; the construction lag followed eight quarters later. Condo completions peaked after the housing bust got underway. There’s a lesson there.

As housing outcomes improve, an inflexion in development renders the multifamily equivalence assumption less tenable. Instead, the data augurs a shift in tenure bias, away from crisis levels of apartment demand and to the benefit of ownership. That’s not to say the new normal for ownership is the same as the old normal. But for investors looking more than one step ahead, it’s another indicator that apartment momentum is coming off its peak.

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