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
| Nov 27, 2013
Wonder walls: 13 choices for the building envelope
BD+C editors present a roundup of the latest technologies and applications in exterior wall systems, from a tapered metal wall installation in Oklahoma to a textured precast concrete solution in North Carolina.
| Nov 26, 2013
Construction costs rise for 22nd straight month in November
Construction costs in North America rose for the 22nd consecutive month in November as labor costs continued to increase, amid growing industry concern over the tight availability of skilled workers.
| Nov 25, 2013
Building Teams need to help owners avoid 'operational stray'
"Operational stray" occurs when a building’s MEP systems don’t work the way they should. Even the most well-designed and constructed building can stray from perfection—and that can cost the owner a ton in unnecessary utility costs. But help is on the way.
| Nov 19, 2013
Top 10 green building products for 2014
Assa Abloy's power-over-ethernet access-control locks and Schüco's retrofit façade system are among the products to make BuildingGreen Inc.'s annual Top-10 Green Building Products list.
| Nov 15, 2013
Greenbuild 2013 Report - BD+C Exclusive
The BD+C editorial team brings you this special report on the latest green building trends across nine key market sectors.
| Nov 15, 2013
Metal makes its mark on interior spaces
Beyond its long-standing role as a preferred material for a building’s structure and roof, metal is making its mark on interior spaces as well.
| Nov 13, 2013
Installed capacity of geothermal heat pumps to grow by 150% by 2020, says study
The worldwide installed capacity of GHP systems will reach 127.4 gigawatts-thermal over the next seven years, growth of nearly 150%, according to a recent report from Navigant Research.
| Nov 8, 2013
Net-zero bellwether demonstrates extreme green, multifamily style
The 10-unit zHome in Issaquah Highlands, Wash., is the nation’s first net-zero multifamily project, as certified this year by the International Living Future Institute.
| Nov 6, 2013
Dallas’s goal of carbon neutrality by 2030 advances with second phase of green codes
Dallas stands out as one of the few large cities that is enforcing a green building code, with the city aiming to be carbon neutral by 2030.
| Oct 30, 2013
15 stellar historic preservation, adaptive reuse, and renovation projects
The winners of the 2013 Reconstruction Awards showcase the best work of distinguished Building Teams, encompassing historic preservation, adaptive reuse, and renovations and additions.
