Dive Brief:
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The apartment-building frenzy of the past few years could be winding down, the National Association of Home Builders’ chief economist said this week.
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Speaking at the International Builders’ Show in Las Vegas, economist David Crowe told an audience of homebuilders that the multifamily housing market will begin to level off as “we start seeing the oldest millennials, the ones who became renters earlier in this cycle, peeling off finally into homeownership.”
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Crowe said a sustainable level of multifamily building will settle in at around 360,000 units per year, up from 2014’s total of 352,000 units. But growth from year to year will be less drastic than in recent years; multifamily unit starts jumped by 14% from 2013 to 2014.
Dive Insight:
The conversion of renters into owners isn’t the only reason why multifamily homebuilding might stop soaring. Rising construction costs are shrinking the return on investment for builders, and overbuilding in some areas is outpacing demand.