Latest Posts:
Tag

multifamily

Browsing
In Research & Trends

Multifamily Housing: Distribution, Building Size, and Gross Rent Across Congressional

No Comments


Approximately 27% of the national housing stock consists of multifamily homes—defined as residential buildings with multiple separate housing units within one structure. According to the 2023 American Community Survey 1-year estimates, these units range from small duplexes, triplexes, and quadplexes (2 to 4 units) to medium-sized buildings (5 to 49 units) and large complexes (50 or more units).

While most congressional districts have multifamily housing shares between 10% to 20% of total housing units, this proportion varies widely, from as low as 8% to as high as 98%. The map below illustrates the distribution of multifamily housing stock across congressional districts with larger shares indicated by bigger bubble size. This visualization shows that districts with the largest share of multifamily units are, unsurprisingly, concentrated in densely populated urban areas.

New York leads in this regard, with its 12th and 13th Districts – both encompassing upper and midtown Manhattan – having almost exclusively multifamily units at 98% each. In fact, eight out of the top 10 districts with the largest share of multifamily housing are in New York. Other areas with large shares include New Jersey’s 8th District, also within the New York metropolitan area, and Massachusetts’s 7th District that includes Boston. At the lower end of the distribution, North Carolina’s 8th District has only 8% multifamily units, while Michigan’s 2nd and 9th Districts, Arizona’s 9th District, and Florida’s 12th District all have around 9% multifamily units.

Building Sizes in Multifamily Units

In most congressional districts, multifamily units tend to be on the smaller side, with the majority consisting of buildings with 5 to 19 units, followed by those with 2 to 4 units. Duplexes, triplexes, and quadplexes (2 to 4 units) are especially common in the Northeast, various Mountain states, and parts of California. Apart from Illinois’s 4th District, which has the highest share of small multifamily units (70%), the remaining top five districts with the largest shares of 2 to 4 unit buildings are all in New York, each exceeding 60%.

Buildings with 5 to 19 units are more prevalent across the South and Midwest, with Maryland’s 2nd, 3rd and 4th Districts owning majority shares of this building type with 59%, 62% and 61%, respectively. High-density areas like New York’s 12th District, Florida’s 27th District – located within Miami-Dade County – and Washington, D.C. (at large), tend to have the largest multifamily (50 or more) buildings. North Dakota (at large) and Minnesota’s 6th District stand out as the only two congressional districts where the majority of multifamily buildings have between 20 to 49 multifamily units.

Gross Median Rent and Renter Cost Burden

Multifamily units are predominantly rented rather than owned, with 86% being occupied by renters. This trend holds across all multifamily types, with larger buildings generally more likely to be rental properties, while condominiums (owner-occupied units) are often smaller buildings. A Fannie Mae study on the multifamily market found that larger properties typically command higher monthly rents, especially in major metropolitan areas. The chart below corroborates this, showing that districts with higher shares of large multifamily buildings (50 or more units) also have higher median monthly rents (including utilities and fuel). However, lower median rents don’t always equate to more affordability, as even low-rent areas can have high renter cost burdens due to lower income levels. For example, New York’s 12th District has the highest median rent at $3,121, with 43% of renters burdened (spending over 30% of income on housing costs), a rate matched by Kentucky’s 5th District, where the median rent is only $727. Overall, despite rent prices moderating (see Real Rent Index), rental cost burdens remain high across the country, with only 23 of 436 congressional districts (including D.C.) having fewer than 40% of renter households burdened by housing costs.

Additional housing data for your congressional district are provided by the US Census Bureau here.

Discover more from Eye On Housing

Subscribe to get the latest posts sent to your email.



This article was originally published by a eyeonhousing.org . Read the Original article here. .

Read More
By
In Research & Trends

Single-Family Starts Trend Higher in September

No Comments


With the Federal Reserve beginning an easing of monetary policy and builder sentiment improving, single-family starts posted a modest gain in September while multifamily construction continued to weaken because of tight financing and an ongoing rise in completed apartments.

Overall housing starts decreased 0.5% in September to a seasonally adjusted annual rate of 1.35 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

The September reading of 1.35 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts increased 2.7% to a 1.03 million seasonally adjusted annual rate. On a year-to-date basis, single-family construction is up 10.1%. The September gain for single-family home building mirrored an increase for the NAHB/Wells Fargo HMI.

While single-family home building increased in September, higher mortgage interest rates in October are likely to place a damper on growth in next month’s data. Nonetheless, NAHB is forecasting a gradual, if uneven, decline for mortgage rates in the coming quarters, with corresponding increases for single-family construction.

The multifamily sector, which includes apartment buildings and condos, decreased 9.4% to an annualized 327,000 pace. This marks the weakest pace since May. Multifamily construction will remain weak as completions of apartments are elevated.

On a regional and year-to-date basis, combined single-family and multifamily starts are 9.0% higher in the Northeast, 2.0% lower in the Midwest, 4.6% lower in the South and 5.4% lower in the West.

Overall permits decreased 2.9% to a 1.43 million unit annualized rate in September. Single-family permits increased 0.3% to a 970,000 unit rate. Multifamily permits decreased 8.9% to an annualized 458,000 pace. This is the weakest reading since May.

Looking at regional data on a year-to-date basis, permits are 0.8% higher in the Northeast, 2.6% higher in the Midwest, 2.2% lower in the South and 5.1% lower in the West.

The number of single-family homes under active construction totaled 642,000 in September. After stabilizing recently, this is down just 4.5% from a year ago. The number of multifamily units under construction declined 3.4% in September to an 842,000 total. This is 16.5% lower than a year ago and is the smallest count since February 2022.

As a sign of the reversal for multifamily construction, the seasonally adjusted annual rate of multifamily construction was 680,000 in September. This was roughly twice the pace of multifamily starts, meaning for every two apartments finishing construction, only one new unit began construction. The pace of multifamily completions was up 41% compared to a year ago.

Discover more from Eye On Housing

Subscribe to get the latest posts sent to your email.



This article was originally published by a eyeonhousing.org . Read the Original article here. .

Read More
By
In Research & Trends

Single-Family Starts Up in August but Supply-Side Issues Linger

No Comments


Single-family starts posted a solid gain in August on robust demand and moderating mortgage rates even as builders continue to grapple with challenges related to lot and labor shortages and elevated prices for many building materials.

Overall housing starts increased 9.6% in August to a seasonally adjusted annual rate of 1.36 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

The August reading of 1.36 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts increased 15.8% to a 992,000 seasonally adjusted annual rate. On a year-over-year basis, single-family starts are up 5.2% compared to August 2023. On a year-to-date basis, single-family starts are up 10.4%. The three-month moving average (a useful gauge given recent volatility) is down to 944,000 units, as charted below.

The multifamily sector, which includes apartment buildings and condos, decreased 4.2% to an annualized 364,000 pace. The three-month moving average for multifamily construction has trended upward to a 363,000-unit annual rate. On a year-over-year basis, multifamily construction is up 0.6%.

On a regional and year-to-date basis, combined single-family and multifamily starts are 1.9% lower in the Midwest, 2.1% lower in the Northeast, 4.4% lower in the West and 4.6% lower in the South.

The total number of single-family homes and apartments under construction was 1.5 million in August. This is the lowest total since November 2021. Total housing units now under construction are 11.1% lower than a year ago. Single-family units under construction fell to a count of 642,000—down 5.2% compared to a year ago. The number of multifamily units under construction has fallen to 867,000 units. This is down 15.0% compared to a year ago.

On a 3-month moving average basis, there are currently 1.8 apartments completing construction for every one that is beginning construction. While apartment construction starts are down, the number of completed units entering the market is rising due to prior elevated construction levels. Year-to-date, the pace of completions for apartments in buildings with five or more units is up 36.7% in 2024 compared to 2023. A higher pace of completions in 2024 for multifamily construction will place some downward pressure on rent growth.

Overall permits increased 4.9% to a 1.48-million-unit annualized rate in August. Single-family permits increased 2.8% to a 967,000 unit rate. Multifamily permits increased 9.2% to an annualized 508,000 pace.

Looking at regional data on a year-to-date basis, permits are 2.1% higher in the Midwest, 0.7% higher in the Northeast, 1.1% lower in the South and 6.2% lower in the West.

Discover more from Eye On Housing

Subscribe to get the latest posts sent to your email.



This article was originally published by a eyeonhousing.org . Read the Original article here. .

Read More
By
In Research & Trends

Apartment Construction Time Averaged 20 Months in 2023

No Comments


The average length of time to complete construction of a multifamily building after obtaining authorization was 19.9 months in 2023, according to the 2023 Survey of Construction (SOC) from the Census Bureau. The permit-to-completion time inched up 0.1 months in 2023, after an increase of 2.3 months in 2022, as the ongoing skilled labor shortage and supply chain issues were still challenging the industry.

The average time to build multifamily homes varies with the number of units in the building. The more units, the more time required to build. In 2023, buildings with 20 or more units took the longest time,22 months, to build after obtaining authorization. Properties with 10-to-19 units required 21.5 months. However, 2-to-4 unit buildings came in at 18.7 months, which took longer time than 5-to-9 unit buildings (16.9 months).

Compared to 2019, pre-pandemic, only buildings with 5 to 9 units took a similar time to complete. The construction process required 3.3 more months to complete multifamily buildings with 2-to-4 units, 2.8 months more for 10-to-19 unit buildings, and 3 months longer to finish for properties with 20 or more units.

The 2023 SOC data also shows a significant regional variation in the average construction duration of multifamily buildings. The West had the longest time from authorization to completion at 20.9 months, followed by the Northeast at 20.8 months, and then the South with 19.5 months. The shortest permit-to-completion period happened in the Midwest with 17.3 months.

Discover more from Eye On Housing

Subscribe to get the latest posts sent to your email.



This article was originally published by a eyeonhousing.org . Read the Original article here. .

Read More
By
In Research & Trends

New Review Spotlights the Unintended Consequences of Rent Control

No Comments


Although rent control policies do, in fact, produce lower rents in the controlled units as intended, these policies also have a number of unintended and undesirable consequences, according to a recently published review of the academic literature. Among the unintended consequences are a reduced supply of housing, higher rents in uncontrolled units, reduced quality in the controlled units, and reduced residential mobility.

The review is titled “Rent Control Effects Through the Lens of Empirical Research: An Almost Complete Review of the Literature,” authored by Konstantin Kholodilin and  published in the March 2024 issue of the peer-reviewed Journal of Housing Economics. The review covers 112 empirical rent control studies based on a wide range of data sources and published between 1963 and 2023. The table below summarizes the theoretic rent control effects analyzed in more than six of the studies.

In addition, there were thirteen studies that all find that rent control resulted in misallocations of resources of various types.

Policymakers should be particularly concerned with the findings that rent control results in a reduced supply of housing and higher rents in the uncontrolled units. Builders, of course, are likely to focus on the depressing effect rent control has on new construction, which is consistent with research NAHB undertook jointly with the National Multifamily Housing Council (NMHC) in 2022. In that research, NAHB and NMHC asked multifamily developers if they avoid building in jurisdictions with rent control. Over 85% said yes.

Kholodilin’s review concludes that rent control leads to a wide range of adverse effects, and that policymakers should take these effects into account when trying to design an optimal policy. Readers interested in the full review can obtain it from sciencedirect.com.

Discover more from Eye On Housing

Subscribe to get the latest posts sent to your email.



This article was originally published by a eyeonhousing.org . Read the Original article here. .

Read More
By
In Research & Trends

HBGI Q2 2024: Single Family Growth vs. Multifamily Decline

No Comments


Despite high mortgage rates, the lack of resale homes and pent-up demand drove solid growth in single-family permits across nearly all regions in the second quarter. In contrast, multifamily construction permit activity experienced declines across all regions for the second quarter of 2024. These trends are tabulated from the recent release of the National Association of Home Builders’ (NAHB) Home Building Geography Index (HBGI).

Single-Family

All markets for single-family construction saw higher growth in the second quarter compared to the first quarter. In contrast to the second quarter of 2023, which experienced declines across all markets, this year shows a clear reversal. Large metro core counties had the largest growth rate for the second consecutive quarter at 17.6%, while micro counties continued to have the lowest for the third straight quarter, at 3.4%.

Looking at single-family HBGI market shares, small metro core counties continued to have the largest market share at 28.9%. Large metro suburban counties are the only other market with over 20% market share, at 25.0% in the second quarter. The smallest market share continued to be non metro/micro counties at 4.3%. However, this market remains almost a percentage point higher than what it was pre-pandemic in 2019.

Multifamily

In the multifamily sector, the HBGI year-over-year growth continued to post declines for all markets in the second quarter. This can be contributed to high levels of multifamily units under construction and tighter financial conditions. Only two markets had larger declines than the first quarter, with large metro suburban counties down 21.1% and non metro/micro counties down 14.8%. Notably, non metro/micro counties were the last market to experience a decline in multifamily construction. These counties were an area of growth in the second, third and fourth quarters of last year while all other markets experience declines or negligible growth.

Multifamily market shares in the HBGI remained similar to the first quarter, with large metro core counties having the largest market share at 40.1%. The smallest market was non metro/micro counties, with a 1.1% market share.

The second quarter of 2024 HBGI data along with an interactive HBGI map can be found at http://nahb.org/hbgi.

Discover more from Eye On Housing

Subscribe to get the latest posts sent to your email.



This article was originally published by a eyeonhousing.org . Read the Original article here. .

Read More
By
In Research & Trends

Apartment Completions Rising

No Comments


The percentage of new apartment units that were absorbed within three months of completion rose from a decade low 42% to 53% in the first quarter of 2024, according to the Census Bureau’s latest release of the Survey of Market Absorption of New Multifamily Units (SOMA). The SOMA survey covers new units in multifamily residential buildings with five or more units. The absorption rate within three months for condominiums and cooperative units also rose over the quarter, up from 63% to 69%.

Apartments

The percentage of apartments absorbed within three months has fallen significantly from its peak of 75% in the third quarter of 2021, as shown in the graph above. Currently, the rate stands at 53% which is coupled with an uptick in completions, as SOMA estimates show a historically high level of completions at 99,120 units in the first quarter of 2024. This is well above the level of completions a year ago, which stood at 83,140. The pace of multifamily units being completed has picked up, as many units under construction over the past year are reaching the market. Since the first quarter of 2022, completions have been above 75,000 for eight consecutive quarters, as seen in the graph below.

Additionally, SOMA reports absorption rates within six-months, nine-months, and 12-months of completion. The absorption rates for all time periods follow similar downward trends as the number of apartments has ticked upwards over the past two years. For apartments completed in the 4th quarter of 2023, the absorption rate within six months of completion was 71%, down from a peak of 88% in the third quarter of 2021.

For the nine-month period, the absorption rate of apartments completed in the third quarter of 2023 fell to 84% down from the previous quarter’s completions of 88%. This rate also peaked at 96% in the same quarter as the other periods, the third quarter of 2021.

Finally, apartment units completed in the second quarter of 2023 were 94% absorbed within a year following completion. The trend remains the same for the 12-month period as the other time periods, as it peaked in the third quarter of 2021 at 98%.

Condominiums and Cooperative Units

The absorption rate for new condominiums and cooperative units rose to 69% for the quarter. However, this was 10 percentage points lower than absorption rate of the same quarter last year.

Total completions of new condominiums and cooperative units, according to SOMA, fell to the lowest level since the first quarter of 2022 marking 3,312 completed units. Quarterly completions of these units peaked in the second quarter of 2018, at 7,996 completions.

Discover more from Eye On Housing

Subscribe to get the latest posts sent to your email.



This article was originally published by a eyeonhousing.org . Read the Original article here. .

Read More
By
In Research & Trends

Second Quarter Multifamily Missing Middle

No Comments


The missing middle construction sector includes development of medium-density housing, such as townhouses, duplexes and other small multifamily properties.

The multifamily segment of the missing middle (apartments in 2- to 4-unit properties) has disappointed since the Great Recession. For the second quarter of 2024, there were just 3,000 2- to 4-unit housing unit construction starts. This is flat from a year prior.

As a share of all multifamily production, 2- to 4-unit development was just above 3% of the total for the second quarter. In contrast, from 2000 to 2010, such home construction made up a little less than 11% of total multifamily construction. Construction of the missing middle has clearly lagged during the post-Great Recession period and will continue to do so without zoning reform focused on light-touch density.

Discover more from Eye On Housing

Subscribe to get the latest posts sent to your email.



This article was originally published by a eyeonhousing.org . Read the Original article here. .

Read More
By
In Research & Trends

Multifamily Built-for-Rent Share Remains Elevated

No Comments


According to NAHB analysis of quarterly Census data, the count of multifamily, for-rent housing starts declined significantly during the second quarter of 2024. For the quarter, 88,000 multifamily residences started construction. Of this total, 83,000 were built-for-rent. This marks a notable 37% decline from the second quarter of 2023 for the multifamily built-for-rent category.

The market share of rental units of multifamily construction starts was flat at a still elevated 94% for the second quarter as the small condo market remained held back due to higher interest rates. In contrast, the historical low share of 47% was set during the third quarter of 2005, during the condo building boom. An average share of 80% was registered during the 1980-2002 period.

For the second quarter, there were just 5,000 multifamily condo unit construction starts.

An elevated rental share of multifamily construction is holding typical apartment size below levels seen during the pre-Great Recession period. According to second quarter 2024 data, the average square footage of multifamily construction starts was relatively unchanged at 1,034 square feet. The median declined to 955 square feet. These estimates are near multidecade lows.

Discover more from Eye On Housing

Subscribe to get the latest posts sent to your email.



This article was originally published by a eyeonhousing.org . Read the Original article here. .

Read More
By
In Research & Trends

Single-Family Starts Weak in July

No Comments


High interest rates for construction and development loans as well as ongoing challenges regarding labor shortages and higher prices for many building materials continued to slow the building market this summer.

Overall housing starts decreased 6.8% in July to a seasonally adjusted annual rate of 1.24 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. This is the lowest pace since May 2020.

The July reading of 1.24 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts decreased 14.1% from an upwardly revised June figure to an 851,000 seasonally adjusted annual rate. However, on a year-to-date basis, single-family starts are up 11.4%.

The multifamily sector, which includes apartment buildings and condos, increased 14.5% to an annualized 387,000 pace.

The decline in new home construction mirrors our latest builder surveys (the NAHB/Wells Fargo HMI), which show that buyers remain concerned about challenging affordability conditions and builders are grappling with elevated rates for builder loans, a shortage of workers and lots, and supply chain concerns for some building materials.

Better inflation data points to the Federal Reserve moving to cut interest rates possibly as early as September, and with interest rates expected to moderate in the months ahead, this will help both buyers and builders who are dealing with tight lending conditions.

On a regional and year-to-date basis, combined single-family and multifamily starts are 1.3% lower in the Northeast, 5.1% lower in the Midwest, 5.4% lower in the South and 5.1% lower in the West.

Overall permits decreased 4.0% to a 1.40 million unit annualized rate in July. Single-family permits decreased 0.1% to a 938,000 unit rate. Multifamily permits decreased 11.1% to an annualized 458,000 pace.

Looking at regional data on a year-to-date basis, permits are 1.1% higher in the Northeast, 3.2% higher in the Midwest, 0.3% lower in the South and 4.1% lower in the West.

Single-family homes under construction fell back to a count of 653,000—down 4.1% compared to a year ago. The number of multifamily units under construction fell to an 886,000 count—down 13.2% compared to a year ago. The number of multifamily units under construction is now the lowest since July 2022.

Discover more from Eye On Housing

Subscribe to get the latest posts sent to your email.



This article was originally published by a eyeonhousing.org . Read the Original article here. .

Read More
By
Load More
Pin It