Apartment Absorption Steady While Condominium Absorption Climbs

The U.S. Census Bureau produces the Survey of Market Absorption (SOMA), which tracks what happens to apartments in buildings with five or more units after they are completed. In the third quarter of 2017, 77,900 unfurnished, unsubsidized rental apartments were completed.  This is a 6 percent increase over units completed in the third quarter of 2016 (73,400 units) (FIGURE 1).

The absorption rate, or the share of these apartments rented within three months of completion, was 58 percent, which is in the same territory as the rates in the third quarter of 2016 (59 percent) and the third quarter of 2015 (60 percent) (FIGURE 1). The median asking rent for apartments completed in the third quarter of 2017 was $1,383, approximately $131 less than the median asking rent of $1,514 in the third quarter of 2016.

Condominium completions amounted to 3,200 units in the third quarter of 2017, a 52 percent decrease from the units completed in the third quarter of 2016 (6,700 units). While the number of condominium completions dropped year-over-year, the absorption rate ticked up: a 78 percent absorption rate in the third quarter of 2017 compared to 70 percent in the third quarter of 2016 (FIGURE 2). The median of asking price of condominiums constructed in the third quarter of 2017 was $575,600.

Figure 3 provides a lens into the market for new subsidized or tax credit apartments (those subsidized by multifamily bonds without the tax credit not included in count). In the third quarter of 2017, 9 percent of all apartment completions were subsidized or tax credit based (8,600 apartments). This is up from 5 percent in the third quarter of 2016 (5,000 apartments).



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