U.S. Needs At Least 4.6 Million New Apartments
by 2030 To Meet Demand and Control Housing Costs
Honolulu, Boston, Baltimore, Miami and Memphis are the hardest
cities to add necessary new apartments, according to new research
from Hoyt Advisory Services (HAS), commissioned by the National
Apartment Association (NAA) and National Multifamily Housing
Council (NMHC). The research examines and ranks 50 metro areas
based on specific factors, including local regulations and the
amount of available land to develop.
The ranking, titled the Barriers to Apartment Construction
Index, scores 50 metro areas along an index that goes up to 19.5 in
the most difficult market to add apartments (Honolulu) all the way
down to -5.9 in the easiest (New Orleans). While real estate is
very project specific, any score above the median of 1.8 means that
it is harder to add new apartments in a specific metro compared to
other metros. Regardless of where each metro area ranks, the United
States needs to build at least 4.6 million new apartments by 2030
to meet the expected increase in demand; otherwise the
affordability problems that exist today will only get worse.
NMHC and NAA also today released Vision 2030, a set of
recommendations for all levels of government on how to lower
barriers to development and better address the current and future
housing shortage of all types of apartments and at all price
points. To add to the challenge of accommodating 4.6 million
apartment households, as many as 11.7 million existing apartments
could need to be renovated, or risk being lost from the stock.
The number of apartment renters is at an all-time high, and the
growing demand for apartments is making it challenging for millions
of families nationwide to find quality rental housing that is
affordable at their income levels.
“For many families, the shortage of affordable rental housing
creates significant hurdles that can hamper their future financial
success. This is not just a problem for today. By 2030, the
affordable housing crisis will become even more severe unless
public and private sector leaders take bold, innovative action,”
said Dr. Norm Miller, Principal at Hoyt Advisory Services
and Professor of Real Estate at the University of San Diego.
According to the new study, meeting the demand for apartments
means building more than 325,000 new apartment homes each year on
average; however, from 2012 through 2016, the apartment industry
averaged only 244,000 new apartment homes (in buildings with 5
units or more) per year. The last time the industry built more than
325,000 in a single year was 1989. This new apartment construction
would boost the economy in the coming years, both nationally and in
local metro areas.
“While the number of new apartments built each year has been
rising, it hasn’t been enough to meet current demand and make up
for any possible shortfall at certain price points in the years
following the recession. This imbalance between high demand and
limited supply options has driven down affordability and reduced
housing options for renters. Rents tend to be particularly high in
areas with the greatest barriers to new development, such as
California, where there’s a significant shortage in available land
for building new apartment homes. This makes it more expensive to
build,” said NAA Chair Cindy Clare, CPM.
“For many reasons, building apartments has become costlier and
more time-consuming than it needs to be. Over the past three
decades, not only have hard costs like land and materials risen
sharply, but regulatory barriers to apartment construction have
also increased significantly, most notably at the local level,”
explained NMHC Chair Bob DeWitt. “These obstacles to development,
such as outdated zoning laws, unnecessary land use restrictions,
arbitrary permitting requirements, inflated parking requirements,
environmental site assessments and more, discourage housing
construction and raise the cost of those apartment communities that
do get built.”
According to the research, the easiest cities to build new
apartments included New Orleans, Little Rock, Kansas City,
Indianapolis and St. Louis.
To reach the goal of building 4.6 million apartments by 2030,
government officials and private developers must come together to
take action. NAA and NMHC are advocating for solutions at all
levels of government that will help supply meet demand and reduce
the cost of developing apartments.
The federal government can ensure sufficient funding of housing
programs, enact a pro-housing tax policy, and reform regulations
that unnecessarily increase housing costs.
State and local governments have a toolbox of approaches they
can take to address the apartment shortage and help reduce the cost
of housing. They can:
- Adopt local public policies and
programs that harness the power of the private sector to make
housing affordability more feasible.
- Increase public-private
partnerships.
- Leverage the state-level authority to
overcome obstacles to apartment construction.
- Collaborate with business and community
leaders to promote apartments.
Based on research conducted by Hoyt Advisory Services and
commissioned by NMHC and NAA, the data includes an estimate of the
future demand for apartments in the United States, the 50 states
and 50 metro areas, including the District of Columbia. For the
purposes of this study, apartments are defined as rental apartments
in buildings with five or more units. The data are available on the
website www.WeAreApartments.org.
In conjunction with the study’s release, the website
www.WeAreApartments.org breaks down the data by each state and 50
key metro areas. Visitors can also use the Apartment Community
Estimator – or ACE – a tool that allows users to see the trends
in their state or metro area to determine the potential economic
impact locally.
For more information, visit www.WeAreApartments.org.
For more than 25 years, the National Multifamily Housing Council
(NMHC) and the National Apartment Association (NAA) have partnered
on behalf of America's apartment industry. Drawing on the knowledge
and policy expertise of staff in Washington, D.C., as well as
the advocacy power of 170 NAA state and local affiliated
associations, NAA and NMHC provide a single voice for developers,
owners and operators of multifamily rental housing. Today, more
than one-third of Americans rent their housing and 39 million
people live in an apartment home. For more information, please
visit www.nmhc.org or www.naahq.org.
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version on businesswire.com: http://www.businesswire.com/news/home/20170626005015/en/
Adrienne Walkowiak,
603-659-9345Adrienne@AdrienneWalkowiak.comorNMHCJim
Lapides,
202-974-2360jlapides@nmhc.orgorNAACarole
Roper, 703-797-0616croper@naahq.org