Apartment Absorption Remains Steady

The US Census Bureau’s Survey of Market Absorption (SOMA), produced in collaboration with the Department of Housing and Urban Development, provides users with the opportunity to take a look at apartment completions and absorption rates on a quarterly basis.

According to the SOMA, completions of unfurnished, unsubsidized apartments in buildings with five or more units totaled to 70,400 in the fourth quarter of 2017 (Figure 1). This is only 2 percent lower than completions in the fourth quarter of 2016 (72,100).

The absorption rate, which is the share of apartments completed in the fourth quarter of 2017 and rented out in the first quarter of 2018, was 50 percent, not a sizable change from the 47 percent rented out in the same period last year.

Along with apartment completions, the SOMA has data on condominiums. In the fourth quarter of 2017, condominium completions amounted to 4,200, 47 percent lower than completions in the fourth quarter of 2016 (7,900) (Figure 2). The absorption rate for these condominiums stood at 79 percent, much higher than the absorption rate observed for condominiums completed in the fourth quarter of 2016 (36 percent). However, it is important to note that completions from the fourth quarter of 2017 are in line with the trend of three to four thousands units seen since mid-2015. Completions from the fourth quarter of 2016, along with the first quarter of 2017, appear to be anomalies.

The SOMA also includes completions of subsidized or tax credit apartment units (apartments subsidized by multifamily bonds not included). In the fourth quarter of 2017, 11,900 of these units were completed. The overall share of subsidized/tax credit completions jumped to 13.4 percent of total apartments, which is about 8 percentage points higher than completions in the fourth quarter of 2016 (Figure 3).



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