Updated about 8 years ago on . Most recent reply
Rental Units Up In Some Cities - 50+ Unit Buildings on the rise
Sin City’s projected 5,000 new apartment units for this year makes no noise nationally in the latest real estate craze. “In 2017, the ongoing apartment building-boom in the US will set a new record: 346,000 new rental apartments in buildings with 50+ units are expected to hit the market,” writes Wolf Richter on Wolf Street. That is three times the number of units that came on line in 2011.
Richter continues, “Deliveries in 2017 will be 21% above the prior record set in 2016, based on data going back to 1997, by Yardi Matrix, via Rent Café. And even 2015 had set a record. Between 1997 and 2006, so pre-Financial-Crisis, annual completions averaged 212,740 units; 2017 will be 63% higher!”
I’ve written before about the high-rise crane craze in Seattle, but that’s nothing compared to New York and Dallas, that are adding 27,000 and 25,000 units, respectively. Chicago is adding 7,800 units despite a shrinking population and rents decreasing 19 percent.
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@Account Closed Chicago leads the US in population loss, according to the Chicago Tribune, March 23, 2017.
I've been watching this trend for a few years. Gunning for millennial renters, who supposedly all want to live in major urban cores, and fueled by cheap money and foreign flight capital, massive building has been going on, almost all in Class A assets, and in a vanishingly small number of submarkets. Rental gluts are already starting to appear in several big cities, like New York, and that is where the crash will begin. The giant sucking sound will then draw back capital from all the smaller markets where it has been pushed in recent years in search of yield.
On the millennial point, the Urban Land Institute did a major study on millennials a couple of years back and found that the overwhelming majority of them do not live - and cannot afford to live - in downtown urban cores. Indeed, they are the least affluent generation in America. And all this luxury housing is being built for them. This will not end well.