Eye On Housing
After rising during the boom years and falling during the Great Recession, the average size of newly built, multifamily units remains close to levels seen a decade ago. As multifamily developers build more for-sale housing units in the years ahead, the average size of multifamily units is likely to rise.
According to third quarter data from the Census Bureau, the average square footage of multifamily housing construction starts was 1,210. The median was 1,085.
Because the quarterly data are volatile, it is worth examining the numbers on a one-year moving average basis. For the third quarter, the one-year moving average for the multifamily size average was 1,177 square feet, while the median was 1,104. These measures are both approximately 5% higher than cycle lows.
However, these measures remain just slightly below the average sizes seen during the 2001-2003 period, when the average was 1,180 and the median was 1,093.
The typical size of a new multifamily unit is well below the averages/medians recorded during the boom years, when the share of for-sale multifamily was considerably higher. The share of multifamily housing starts built for-rent fell to a historical low of 47% during the third quarter of 2005. It is currently (92%) above the approximate 80% share recorded during the 1980-2002 period due to the rise in rental demand following the housing crisis.
Thus, the reason for some of the recent change in multifamily average size is due to market mix. Renters tend toward smaller units than owner-occupiers. In 2012, for example, the median size of all multifamily units completed was 1,098 square feet. However, for rental apartments the median was 1,081, while it was a larger 1,466 for condos.
As the for-sale share of multifamily returns back to historical norms in the years ahead, the size of a typical newly built multifamily housing unit will rise as well.
Leave a Reply