Permitting activity for new multifamily housing construction units is currently stronger than it has been in decades, while single-family construction continues to lag, keeping homeownership out of reach for many younger Americans, Apartment List says in a new report.
As multifamily construction remains hot, the construction of new single-family homes has recently begun to sputter.
“As renters face a growing affordability crisis, it is critical that cities plan for new home construction that keep pace with population growth and housing demand,” housing economists Chris Salviati and Rob Warnock write in the study.
Salviati and Warnock say many Sun Belt markets “are doing a decent job of building enough new housing to keep pace with growth, but the nation’s most expensive markets are continuing to severely under build. An influx of new multifamily supply should keep rent growth in check in 2023, but the longer-term national picture is still characterized by shortage.”
“Over the past decade, many of the nation’s large coastal markets – including New York City, Boston, San Francisco, and Los Angeles – have not built nearly enough new housing to keep pace with local job growth, resulting in deep housing affordability crises. In contrast, Sun Belt markets throughout Texas, Arizona and Florida have experienced rapid growth in both jobs and housing.”
See the chart for Phoenix, Arizona metro multifamily housing construction below
Highlights include:
- Today’s high interest rate environment has slowed single-family home construction, but multifamily housing construction remains strong. Today there are nearly 1 million apartments under construction across the nation, more than at any point since 1970. An additional 679,000 were permitted for construction in 2022, an increase of 9 percent compared to 2021.
- In Phoenix metro specifically, 20,541 new apartments and 26,828 new single-family homes were permitted last year. On a per-capita basis, this ranks #8 out of the nation’s 50 largest metros.
- 31 percent of these newly-permitted homes are set to be built in Phoenix proper, while the remainder will be located in outer-lying suburbs.
- In Seattle, 19,783 new multifamily homes were permitted.
- In Portland, only 7,107 new multifamily units were permitted.
Chart for Portland Metro Below
Chart for Seattle Metro Below
