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
| Aug 11, 2010
REDD and Corcoran Group Real Estate developing eco-friendly boutique condos in Brooklyn's Vinegar Hill
REDD and Corcoran Group Real Estate are developing 100 Gold, a 10-unit boutique condominium complex in Brooklyn's Vinegar Hill that consists of (6) one bedrooms, (2) duplex studios—one with a private yard, and (2) penthouses—duplex apartments with one bedroom and loft, and private terraces.
| Aug 11, 2010
AECOM, Arup, Gensler most active in commercial building design, according to BD+C's Giants 300 report
A ranking of the Top 100 Commercial Design Firms based on Building Design+Construction's 2009 Giants 300 survey. For more Giants 300 rankings, visit http://www.BDCnetwork.com/Giants
| Aug 11, 2010
Turner Building Cost Index dips nearly 4% in second quarter 2009
Turner Construction Company announced that the second quarter 2009 Turner Building Cost Index, which measures nonresidential building construction costs in the U.S., has decreased 3.35% from the first quarter 2009 and is 8.92% lower than its peak in the second quarter of 2008. The Turner Building Cost Index number for second quarter 2009 is 837.
| Aug 11, 2010
AGC unveils comprehensive plan to revive the construction industry
The Associated General Contractors of America unveiled a new plan today designed to revive the nation’s construction industry. The plan, “Build Now for the Future: A Blueprint for Economic Growth,” is designed to reverse predictions that construction activity will continue to shrink through 2010, crippling broader economic growth.
| Aug 11, 2010
PCL Construction, HITT Contracting among nation's largest commercial building contractors, according to BD+C's Giants 300 report
A ranking of the Top 50 Commercial Contractors based on Building Design+Construction's 2009 Giants 300 survey. For more Giants 300 rankings, visit http://www.BDCnetwork.com/Giants
| Aug 11, 2010
Webcor, Hunt Construction lead the way in mixed-use construction, according to BD+C's Giants 300 report
A ranking of the Top 30 Mixed-Use Contractors based on Building Design+Construction's 2009 Giants 300 survey. For more Giants 300 rankings, visit http://www.BDCnetwork.com/Giants
| Aug 11, 2010
Report: Fraud levels fall for construction industry, but companies still losing $6.4 million on average
The global construction, engineering and infrastructure industry saw a significant decline in fraud activity with companies losing an average of $6.4 million over the last three years, according to the latest edition of the Kroll Annual Global Fraud Report, released today at the Association of Corporate Counsel’s 2009 Annual Meeting in Boston. This new figure represents less than half of last year’s amount of $14.2 million.
| Aug 11, 2010
First CityCenter projects earn LEED Gold
CityCenter announced today that it has received three Leadership in Energy and Environmental Design LEED Gold certifications from the U.S. Green Building Council for: 1) ARIA Resort's hotel tower; 2) ARIA Resort's convention center and theater; 3) Vdara Hotel. ARIA and Vdara will open in December on the Las Vegas Strip and are the first of CityCenter's developments to be LEED certified.
| Aug 11, 2010
Oldcastle Precast Building Systems wins PCI 2009 Sustainable Design Award
Oldcastle Precast Building Systems was part of the award winning team behind the affordable housing development Melrose Commons Site 5 situated in the South Bronx. PCI (Precast Concrete Institute) recently selected Melrose 5 for the “2009 PCI Design Award for Best Sustainable Project”.