U.S. Multifamily Housing Market to Weaken in 2023
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Loading... - Delta Crawford
- 07 Feb 2023
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Yet Remodeling Market to Remains Solid This Year
According to the National Association of Home Builders, multifamily starts are predicted to fall in 2023, following an unsustainable high level of production last year. Meanwhile, the remodeling sector remains on solid ground and will do better than the single-family and multifamily markets in 2023.
Multifamily construction boomed in 2022, up an estimated 15% from the previous year and exceeded a 500,000 annual pace--the first time since the Great Recession. However, NAHB is projecting that multifamily starts will fall 28% this year to a 391,000 total and will stabilize in 2024 at about 374,000 starts.
"Slowing rent growth, rising unemployment, tightening commercial real estate financing conditions and a substantial amount of supply in the construction pipeline have caused a large backlog of multifamily developments," said NAHB Assistant Vice President for Forecasting and Analysis Danushka Nanayakkara-Skillington at a press conference held during the NAHB International Builders' Show in Las Vegas.
There are currently 943,000 apartments under construction, up 24.9% compared to a year ago (755,000). This is the highest count of apartments under construction since 1974.
Looking at another metric, eight of the top 10 multifamily markets, as measured by the number of permits, posted yearly increases from November 2021 to November 2022. The New York-Newark-Jersey City region, the largest in the nation, registered a 9% increase in permits, while Atlanta-Sandy Springs-Roswell, Ga., had the highest increase at 203%. The following markets all posted gains as well: Dallas-Fort Worth-Arlington, Texas; Houston-The Woodlands-Sugarland, Texas; Los Angeles-Long Beach-Anaheim, Calif; Washington-Arlington-Alexandria, D.C.-Va.-Md.-W.Va.; Phoenix-Mesa-Scottsdale, Ariz.; and Minneapolis-St. Paul-Bloomington, Minn.-Wisc. The markets in Austin-Round Rock, Texas, and Seattle-Tacoma-Bellevue, Wash., posted declines compared to the previous year.
Nanayakkara-Skillington noted that regulations greatly affect multifamily development costs, referencing research conducted by NAHB and the National Multifamily Housing Council.
"Apartment and condo developments can be subject to a significant array of government regulations including zoning requirements, building codes, impact fees, permitting requirements, design standards and public land requirements, among others," said Nanayakkara-Skillington. "These regulations are exacerbating the nation's housing affordability crisis." Read More…
