Eye On Housing
Each year the US Census Bureau collects data on the number of units completed in multifamily buildings in its Survey of Construction (SOC). In 2015, 304,000 for-rent multifamily units were completed. Eight percent of these completions were in buildings with 9 or fewer units, 30 percent were in buildings with 10 to 29 units, 15 percent were in buildings with 30 to 49 units, and 47 percent were in buildings with 50 or more units.
Figure 1 shows for-rent multifamily completions by number of units per building from 2005 to 2015. Among the categories, completions in buildings with 50 or more units increased the most, but were also the most volatile during this time period.
Figure 1: For-Rent Multifamily Completions by Number of Units in Building, ‘05-15
For-rent multifamily completions in buildings with 50 or more units grew by 64 percent from 2007 to 2009, reaching 82,000 units. This was followed by a 55 percent decline, down to 37,000 units by 2011. For-rent multifamily completions in 50+ unit buildings reached 142,000 in 2015, a 284 percent jump since 2011.
One reason for the expansion of for-rent multifamily units is the migration of households to rental properties after losing their homes in the housing crisis. It is important to note that while for-rent multifamily completions expanded in the recovery period, the homeownership rate dropped and has reached a record low.
Although completions of units in buildings with 50 or more units reached a high point in 2015, the rate of completions in this category decelerated between 2014 and 2015. Meanwhile, completion rates of units in smaller multifamily buildings grew at a faster pace.
When looking at multifamily completions in buildings with 50 or more units by region (Figure 2), it is clear that the Northeast experienced a sharp decrease from 2014 to 2015. In contrast, completions of units in buildings with 50 or more units increased in the Midwest, the South, and the West.
Figure 2: Percent Change in Multifamily Completions in Buildings with 50 or More Units, ‘14-15
At infobrij.com we are nationwide experts in providing equity financing for ground-up and value-add MF developments. I find the data points, and the implications, encouraging for the near, medium, and long term.