Multifamily completions are expected to hit a cycle high this year as demand remains robust, Paula Munger, director of industry research and analysis at the National Apartment Association, told Multi-Housing News.
However, currently supply in the ground and in the pipeline is weighted toward the luxury segment and doesn't accommodate the current diversity of demand, particularly among low- and middle-income households and, more generally, young adult renters.
- Multifamily lenders are expected to show caution in financing new projects, though just how much caution is yet to be determined. As of April 2016, two-thirds of multifamily developers reported less available construction financing as compared to six months prior, according to a survey from the National Multifamily Housing Council.
As the luxury multifamily category cools in many major metros due to overbuilding, the affordable housing sector is poised to heat up as demand for low- and middle-income housing grows, particularly for rentals.
In East Harlem, in New York City, plans are underway to turn a former Metropolitan Transportation Authority bus depot building into an affordable housing complex that is expected to deliver up to 730 units. Other major projects in New York City, such as the Sunnyside Yard redevelopment in Queens and the Hudson Yards project in Manhattan, are poised to add thousands of affordable housing units each.
A report by MPF Research in January forecast more than 378,000 new apartments will be completed nationwide in 2017, a figure that is roughly 35% ahead of the average of the last two decades. Meanwhile, the U.S. Commerce Department put overall activity in the multifamily category up 25.7% in December year-over-year at a rate of 421,000 starts.
However, volatility in the category and a reduction in permits due in part to oversupply is expected to see the category taper soon at a still-elevated production level as some big banks hold back financing until the category stabilizes. The department is expected to release its January figures on Thursday, March 16.
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