Brace yourself. I’m about to unleash a tsunami of data to make the argument that the multifamily market is still going strong, despite all the sturm und drang about the coming global economic slowdown and its possible negative effect on apartment starts. Thanks to economist Danushka Nanayakkara-Skillington, the NAHB’s Assistant Vice President for Forecasting & Analysis, and Robert Dietz, PhD, NAHB Chief Economist, who presented the data at the 2019 NAHB International Builders’ Show.
Multifamily housing starts should hit 379,000 units this year. That’s 2% down from 2018’s 386,000, but well ahead (by 10%) of the average for multifamily starts from 2000 to 2007 and not that far off of the post-recession high of 394,000 in 2015.
Multifamily’s share of total housing under construction continues to run in the mid- to high-50% range. That’s probably because single-family construction has still not fully ramped up, although its slope is still up and to the right.
Rental production continues to dominate multifamily construction. The built-for-rent share of multifamily construction has held steady in the 90-95% range for the last five years. Somewhere in America there are brave souls who are building condominiums and for-sale townhomes, but apparently they are few and far between. Demand for rental at all price points continues to be the guiding force in the multifamily market.
According to the Joint Center for Housing Studies at Harvard University,
nearly half of all renters (47%) are “cost-burdened”: they pay more than 30%
of household income for their apartments. Of these 20.8 million cost-burdened
renters, 11.0 million pay more than half their family income for shelter.
Bigger projects provide the bulk of the units in completed multifamily buildings. Projects with 50 or more dwelling units supplied more than half (52%) of the 357,000 completed multifamily residences in 2017 (the last year for which U.S. Census Bureau data was available). Mid-size projects (10 to 49 units) accounted for 40% of completed dwelling units; projects with less than 10 residences yielded the remaining 7-8%. Scale matters.
Multifamily housing starts returned to 107% of normal in Q3/2018. Multifamily starts have returned to normal or above from the market bottom in 2009 in 27 states and the District of Columbia. Alabama is the only state that has not dug out of the trough since 2009.
The senior market may be slowing a bit, but it’s still positive. The NAHB 55+ Housing Market Index fell from a high of 68 in mid-2018, to 56 later in the year. Since any score over 50 indicates a positive attitude by builders and developers, it looks like the market influencers still see senior living facilities as a viable opportunity. My fellow baby boomers and I aren’t getting any younger.
To summarize, apartments are being built, and in goodly number. That’s the rosy side of the multifamily picture. The flip side is that not enough of it is affordable.
According to the Joint Center for Housing Studies at Harvard University, nearly half of all renters (47%) are “cost-burdened”: they pay more than 30% of household income for their apartments. Of these 20.8 million cost-burdened renters, 11.0 million pay more than half their family income for shelter.
Hardest hit: single-parent families and those over age 65.
Those are sobering statistics. What do you think can be done to address this problem?
Related Stories
| Jul 7, 2014
A climate-controlled city is Dubai's newest colossal project
To add to Dubai's already impressive portfolio of world's tallest tower and world's largest natural flower garden, Dubai Holding has plans to build the world's largest climate-controlled city.
| Jul 3, 2014
Gehry edits Canadian skyscraper plan to be 'more Toronto'
After being criticized for the original tower complex, architect Frank Gehry unveils a new design that is more subtle, and "more Toronto."
| Jul 2, 2014
SHoP designs what would be Brooklyn's tallest building
JDS Development partners with SHoP to construct a 70-story building at 775-feet tall, unprecedented for downtown Brooklyn.
| Jun 30, 2014
Research finds continued growth of design-build throughout United States
New research findings indicate that for the first time more than half of projects above $10 million are being completed through design-build project delivery.
| Jun 30, 2014
Narrow San Francisco lots to be developed into micro-units
As a solution to San Francisco’s density and low housing supply compared to demand, local firms Build Inc. and Macy Architecture each are to build micro-unit housing in a small parcel of land in Hayes Valley.
| Jun 30, 2014
Harvard releases the State of the Nation’s Housing 2014
Although the housing industry saw notable increases in construction, home prices, and sales in 2013, household growth has yet to fully recover from the effects of the recession, according to a new Harvard University report.
| Jun 30, 2014
OMA's The Interlace honored as one of the world's most 'community-friendly' high-rises
The 1,040-unit apartment complex in Singapore has won the inaugural Urban Habitat award from the Council on Tall Buildings and Urban Habitat, which highlights projects that demonstrate a positive contribution to the surrounding environment.
| Jun 30, 2014
Gen X, not Baby Boomers, spending the most money on homes [infographic]
It turns out that Generation X, who have the highest incomes of the three generations surveyed, are paying the highest home payments and tend to have the largest households.
| Jun 25, 2014
The best tall buildings of 2014
Four high-rise buildings from multiple continents have been selected as the best of their region. The best worldwide tall building will be announced November 6.
| Jun 20, 2014
Sterling Bay pulled on board for Chicago Old Main Post Office project
Sterling Bay Cos. and Bill Davies' International Property Developers North America partner up for a $500 million restoration of Chicago's Old Main Post Office
