The pandemic building boom brought 1.2 million apartments to the U.S. property market in the last three years (the highest levels since the 1970s). This trend does not seem to be slowing down, with construction as developers are expected to open 460,860 rentals by the end of December, followed by 484,000 new units in 2024.
One driver for this could be work-from-home, particularly during the COVID-19 pandemic which prompted renters to form their own households to gain more living space for offices, children and pets.
Are these new homes in the greatest areas of need and are they within reach of the average working person? Doubt has been spared in relation to both of these considerations, demonstrating the unsuitability of the property market for meeting social needs.
Yet the bubble is deflating. The economic signal is that the current economic challenges are expected to affect the pace of construction further on, as the annual Apartment Construction Report points out. There are another million projected to be built through 2025, although this represents a 15 percent drop in total builds. Tightening of bank lending standards, combined with rising costs of construction materials, labour and land, has made new projects harder to initiate.
The most significant growth is seen in New York, with no less than 33,000 new rental units set to come online by the end of the year. Almost one-third of these apartments will be located in Brooklyn (9,825 units). Meanwhile, Queens will see 4,430 new rentals completed, which is significantly more than the 3,770 new apartments expected in Manhattan.
This is followed by Dallas metro. This vicinity is expected to build 23,659 new rentals by the end of the year, which is almost 10,000 apartments less than New York. In Austin, developers are set to open 23,434 new rentals by year’s end. Texas has five cities in the top 20 builders, representing about 10 percent of total construction in the U.S.: Austin, Houston, San Antonio, Dallas and Fort Worth.
Meanwhile, the Miami metro is in fourth place for new apartments projected to be completed by the end of 2023, with 20,906 units in total. In the same period, Washington, D.C., developers brought 42,723 new apartments to the market.
Other major construction areas for domestic dwellings are Atlanta and Los Angeles, each bringing almost 18,000 new apartments to the market between 2020-2022.
Hoe equitably spread are these new homes? The opportunity for access appears limited, with 60 percent of the new units built from 2020 to 2022 being accessible to only 41 percent of the renter population. Apartments built during the pandemic boom are clustered in just 20 high-growth metros. This means many other places remain undersupplied.
There is also an issue with affordability. Here, 89 percent of the apartments completed in the last three years are high-end.
