While the multi-family industry continued to experience above-average performance in 2017, vacancies for rent-restricted affordable housing properties remains historically low, creating a nationwide shortfall of more than 7.2 million units. These insights and additional analysis are available in the recently released 2018 Apartment Statistical Analysis report from RubinBrown.
The number of multi-family units completed in 2017 represented a 15,000-unit increase over 2016, though most new supply over the past few years has been focused in high rent segments. Expanding supplies of new luxury apartments are pushing up rental rates; apartment prices now stand 30% above the mid-2000s peak in real terms.
However, the demand for all types of affordable multi-family rentals is evident in the historically low vacancy rate of 1.9 percent for rent-restricted properties, which includes Section 8 housing and LIHTCs. The strong demand for units is coupled with an affordability crisis.
According to the State of the Nation’s Housing 2017, only 31% of renters are able to afford the $1,550 median asking rent for a new apartment in 2017. By comparison, in 1990 41% of renters could afford the $1,064 real median asking rent for new units. Supply of low-cost units has also decreased. A Hudson Institute analysis found that 60% of low-cost units in 1985 were lost by 2013.
In conclusion, demand for multi-family rental housing remained high in 2017, leading to most of the newly completed supply being absorbed. Vacancy rates remained low. The multi-family rental market will continue to move forward and grow, backed by the steady economy.
Each year, data is collected from RubinBrown clients, as well as other contacts and referrals within the industry, to comprise averages in a variety of markets within the United States. RubinBrown’s 2018 Apartment Stats includes operational data for 2017 and represents approximately 750 apartment projects in roughly 40 states. While these averages are representative of a smaller pool of projects, the trends are usually consistent with those experienced at the national level.
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