Rentals Grab Biggest Share of New Construction in Decades (and Maybe Ever)

• March 10, 2014

by Lark Turner

Rendering of 333-unit rental building planned for former Hecht warehouse.

About a third of the new homes built in 2013 were multifamily rental buildings, the largest share since data collection began, according to a recent article in The Wall Street Journal.

The rise in multifamily demand comes as the regular crop of young buyers, normally looking to invest in a first home at this stage in life, are instead having difficulty obtaining a mortgage, earning enough to pay it off and dealing with a crush of student debt. Developers are taking notice and ramping up the number of rentals they’re building. The remaining two-thirds of new home construction last year were single-family houses, down from a peak of 87 percent in 1993.

In the DC region, multifamily rental projects are sprouting up almost faster than the market can keep up. In December, UrbanTurf reported that many new rental buildings are offering competitive concessions to bring tenants in the door.

But the glut won’t last long, at least according to one researcher. An estimate of the region’s future population by George Mason University’s David Versel suggests that many, many more units will need to be built to accommodate the influx of people expected to move to the area.

“The region is going to have to add, over the next 20-year period from 2012-2032, about 550,000 housing units, or about 27,000 a year,” Versel said at a recent conference.

Currently, 33.4 percent of DC’s housing is multifamily. By 2032, 37 percent of region’s stock will need to be multifamily, “which is actually attainable” given DC’s rapid new-home growth at the moment, Versel said.

This article originally published at http://dc.urbanturf.com/articles/blog/multifamily_homes_grab_biggest_share_of_new_construction_in_decades_and_may/8218