Multifamily construction hits 50-year high
One in three renters would sacrifice space to achieve their dream of homeownership, according to research by RentCafé, which tracks the apartment market. In new research, the company reported multifamily construction during the past two years reached a 50-year high.
RentCafé analysts said 420,000 new apartments are expected nationwide this year. Apartment completions last topped 400,000 units in 1972.
Seattle is among 10 metro areas that will hit five-year peaks in apartment deliveries this year.
"New apartment construction in the U.S. is flexing its muscle once again in 2022, despite pressing economic concerns and supply chain disruptions in the aftermath of the pandemic," wrote Veronica Grecu in a RentCafé blog.
With pent-up demand driving the construction boom, some industry watchers suggest it could help realign rents with incomes. Nevertheless, Grecu said soaring inflation and rising interest rates are causing some renters to postpone their dream to become homeowners.
Seattle is projected to deliver 15,341 apartments before year end. New York claims the top spot with a record 28,153 new rental apartments anticipated during 2022. That volume is nearly 50% higher than completions in 2021. Three Texas metros - Dallas, Austin and Houston -- claimed 2nd, 4th and 5th place among the top 20 metros.
A comparison of cities by number of apartments built in the first half of 2022 shows Seattle at No. 3, behind Houston and Austin. Developers delivered 3,232 apartments in Seattle from January through June.
Doug Ressler, manager of business intelligence at Yardi Matrix, believes there is one big reason why so many metros are on a record-breaking pace. "People who lived with family or friends during the pandemic formed independent households as employment and savings surged."
Despite the construction frenzy and return to pre-pandemic levels of activity, Ressler said three familiar challenges hamper the industry: labor shortages, material costs and availability, and supply chain issues.
"Supply is struggling to keep up with demand in the Emerald City," stated Grecu, senior creative writer and researcher at RentCafé. The pace of construction is not likely to slow anytime soon, according to Grecu, noting Seattle's population is projected to hit 1 million by 2044 and city officials are working to develop new strategies to add more housing as part of the update to the One Seattle Plan.
Seattle leaders invited feedback until last month (August 22) on the issues and alternatives that will inform the environmental review of the comprehensive plan update. Rico Quirindongo, acting director of the city's Office of Planning & Community Development, said the goal of the One Seattle Plan is "to make the city more equitable, livable, sustainable, and resilient for today's communities and future residents."
In its report on multifamily construction, RentCafé's researchers used data across 125 U.S. metropolitan statistical areas, basing it on figures for buildings containing 50-plus units.
RentCafe.com also offers a nationwide apartment search website. Yardi Matrix, a sister company to Rent Café, is a business development and asset management tool for brokers, sponsors, banks and equity sources.