The US Will Need More Than 4M New Apartments By 2035
Approximately 4.3 million new apartments will be necessary by 2035 to meet rising demand, according to new research from the National Multifamily Housing Council and National Apartment Association.
The new builds are necessary to address a deficit of 600,000 apartment homes that exist in large part thanks to the 2008 financial crisis, the research found. In addition, the number of affordable units, defined as those with rents less than $1,000 per month, declined by 4.7 million from 2015 to 2020.
NMHC and NAA Apartment note that “apartment demand is growing and the industry needs to keep up…”(but) producing enough new apartments to meet demand requires new development approaches, more incentives and fewer restrictions.” Specifically, the US needs to build 266,000 new apartments each year to meet rising demand.
“The lack of available housing is holding our country back. Whether it is a multifamily residence, duplex or single-family home, we need a massive supply of new for sale and rental homes—including millions of new apartments by 2035,” said NMHC President and CEO Doug Bibby. “Making sure everyone has access to quality, affordable housing is a bipartisan issue, and the industry stands ready to do its part to help create the 4.3 million new apartment homes our country needs.”
Immigration has been a main driver of demand, but levels tapered off before the pandemic and remain lower than normal. But “a reversal of this trend would significantly increase” demand, the associations warn. Texas, Florida and California account for 40% of future demand and will collectively require 1.5 million apartments by 2035.
Apartment construction contributes $150.1 billion to the country’s economy annually, creating 752,000 jobs.
“The U.S. has undergone tremendously difficult conditions that have fundamentally altered our nation’s demographics, but one thing remains certain—there is a need and demand for more rental housing,” said NAA President and CEO Bob Pinnegar. “Put simply, we do not have enough housing. The US must build 3.7 million new apartments just to meet future demand, on top of a 600,000 unit deficit and loss of 4.7 million affordable apartment homes. It is time to reverse course after decades of underbuilding, and instead pursue responsible and sustainable policies that will not only meet this demand but address the missing middle and loss of affordable housing stock.”
Multifamily vacancy in Q2 was down another 20 basis points from Q1 to hit a five-year low at 4.5%, dropping by 90 basis points year over year, according to Moody’s. And though construction remains slow, demand is strong: net absorption for the quarter clocked in above 30,000 units.
Source: GlobeSt
