Inventory is a key contributor to the affordability crisis, and construction is falling behind.
The affordable housing crisis in the United States has many causes. A new study, commissioned by apartment industry groups, highlights how low inventory may be a contributing cause for this issue in cities nationwide.
The country needs to construct 4.6 million new apartments by 2030, according to a new study conducted by Hoyt Advisory Services and commissioned by the National Multifamily Housing Council (NMHC) and National Apartment Association (NAA), two nonprofit industry groups. In addition, research found that 51 percent of the current apartment stock was built before 1980, which means roughly 11.7 million additional units may need repairs.
The study found that it will take at least 325,000 new apartment every year to meet demand, yet,on average, just 244,000 units were delivered every year from 2012 through 2016. Over the last five years, an average of one million new rental households were formed, a record amount.
While the need for additional units impacts cities across the country, demand is expected to be especially high in fast-growing cities including Raleigh, North Carolina (69.1 percent increase forecast), Orlando (56.7 percent), and Austin, (48.7 percent). In addition, large urban areas also need a sizable increase of new units, including the New York City metro area (278,634 additional apartments) Dallas-Ft. Worth, Texas (266,296 new units), and Houston, Texas (214,176 new units). The study’s website breaks down demand by state and metro area.
This research attempts to put a number on a problem that’s been cited by many housing analysts. While the number of Americans living in rental housing has increased—due to delayed homeownership among millennials, an aging population, immigration, and an aging population, among other causes—affordability has sharply decreased, according to the Urban Land Institute. The current boom in apartment construction has been aimed mostly at the high end of the market, and the country is facing a severe shortage of affordable rentals, according to The State of the Nation’s Housing 2016, the annual report from Harvard’s Joint Study for Housing Studies (JCHS).