The outlook for multifamily housing will remain strong, according to participants of the National Association of Home Builders International Builders’ Show in Las Vegas last week.
The market for multifamily housing has recovered “substantially” since 2010 and is around 70% of the way back to a sustainable level, NAHB said.
“Last year was a banner year for the multifamily market, and our baseline forecast calls for further steady growth in the rate of multifamily production,” said NAHB Chief Economist David Crowe. “We are forecasting construction of 299,000 new multifamily residences in 2013. While this is an improvement from just a few years ago, it is still well below the 350,000 units that are required to keep supply and demand in balance.”
There is still some hesitation on the part of builders, however, as lack of capital is dragging on the recovery for apartment communities catering to all income levels, said Michael Costa, president and CEO of Highridge Costa Housing Partner LLC in Gardena, Calif.
“Additionally, we are being faced with increases in the cost of building materials and construction labor, which makes it infeasible to build in certain circumstances.”
Written by Elizabeth Ecker
Companies featured in this article:
Highridge Costa Housing Partner LLC, National Association of Home Builders
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Slow & steady will win the race looks like the moral of the Multifamily Housing Recovery noted above.
For now, a little bit of under-building (350,000 units needed with 299,000 units in the supply queue) may be good for residents as well as the industry.
Keeping supply & demand in balance is always the key (and hard to do given the size and diversity of the United States combined with the 2-4 years to complete a typical project). It seems like the low interest rates are still not over-heating the building of supply AND as long as the banks & funding sources are approving good construction projects, good projects will be delivered in quantities desired by renters.
Chris Foley
Sr. V. P.
Seniors Housing Brokerage & Advisors
[email protected]