A new report by Yardi® Matrix indicates that multifamily deliveries might outpace demand in some key U.S. housing markets.
Yardi Matrix conducted a study to determine which areas might be at risk of oversupply or undersupply over the next five years. The research revealed that deliveries in 2016 and 2017 helped compensate for the construction shortage in the wake of the Great Recession.
"Most of the metros that are at short-term risk of oversupply have strong economies and healthy multifamily demand, so units coming online should be absorbed by growing populations," the report concludes.
Markets and submarkets with outsize development activity, however, "can expect volatility" that will give rise to higher vacancy rates and stagnant rent growth. Achieving market equilibrium going forward will require developers to "intelligently calibrate the amount and location of new projects" to accommodate finite demand.
Yardi Matrix identified Denver, Seattle, Dallas, Phoenix, Miami and Charlotte, N.C., as key markets at risk of oversupply over the next five years. Demand is projected to exceed supply in Los Angeles, California's Inland Empire, Houston, New York, San Diego and Sacramento, Calif.
Read "U.S. Multifamily Supply and Demand Forecasts by Metro" to learn more about homeownership, population shifts, social trends and other factors affecting the multifamily market.
Related Stories
Market Data | Apr 8, 2019
Engineering, construction spending to rise 3% in 2019: FMI outlook
Top-performing segments forecast in 2019 include transportation, public safety, and education.
Market Data | Apr 1, 2019
Nonresidential spending expands again in February
Private nonresidential spending fell 0.5% for the month and is only up 0.1% on a year-over-year basis.
Market Data | Mar 22, 2019
Construction contractors regain confidence in January 2019
Expectations for sales during the coming six-month period remained especially upbeat in January.
Market Data | Mar 21, 2019
Billings moderate in February following robust New Year
AIA’s Architecture Billings Index (ABI) score for February was 50.3, down from 55.3 in January.
Market Data | Mar 19, 2019
ABC’s Construction Backlog Indicator declines sharply in January 2019
The Construction Backlog Indicator contracted to 8.1 months during January 2019.
Market Data | Mar 15, 2019
2019 starts off with expansion in nonresidential spending
At a seasonally adjusted annualized rate, nonresidential spending totaled $762.5 billion for the month.
Market Data | Mar 14, 2019
Construction input prices rise for first time since October
Of the 11 construction subcategories, seven experienced price declines for the month.
Market Data | Mar 6, 2019
Global hotel construction pipeline hits record high at 2018 year-end
There are a record-high 6,352 hotel projects and 1.17 million rooms currently under construction worldwide.
Market Data | Feb 28, 2019
U.S. economic growth softens in final quarter of 2018
Year-over-year GDP growth was 3.1%, while average growth for 2018 was 2.9%.
Market Data | Feb 20, 2019
Strong start to 2019 for architecture billings
“The government shutdown affected architecture firms, but doesn’t appear to have created a slowdown in the profession,” said AIA Chief Economist Kermit Baker, Hon. AIA, PhD, in the latest ABI report.
