HOUSTON – (By Dale King, Realty News Report) – Texas leads the nation in apartment construction, with Dallas ranked No. 1 and Houston No. 4, according to RentCafé’s latest Apartment Construction Report.
Austin ranks No. 7 in the report, which orders markets by the projected number of apartment units expected to be completed by the end of 2021.
The Houston metro area is expected to complete 15,760 new apartments this year—12 percent more than in 2020—according to RentCafé, a nationwide apartment search website.
Dallas-Fort Worth again tops the list for rental unit construction. This is the fourth consecutive year the Dallas area occupies the top spot, with an estimated 21,173 new apartments scheduled to enter the market by year’s end.
Austin is projected to add 11,919 new apartments, placing it seventh nationwide.
RentCafé notes that the Dallas area continues expanding, reinforced by recent corporate relocations such as Charles Schwab and CBRE Group, which have increased local demand for housing.
The report highlights the following details for the Houston region:
- Houston is experiencing a 12 percent increase from last year’s 14,094 new units, and significantly more completions than the low point in 2019 when only 10,179 apartments were finished.
- 2018 was also a relatively slow year with 11,841 completed units, a sharp decline from 2017 when 21,701 rental units were added.
- The largest contributors to apartment development in the metro this year are: Houston proper with 7,308 expected units; Katy projected to add 1,884 units; Spring at 1,580; Richmond aiming for 992; Cypress with 603; Conroe at 544; The Woodlands with 502; and Humble at 491.
At the national level, RentCafé reports that developers are on track to introduce 334,000 new apartments into the rental market by the end of the year, surpassing the 300,000 mark for the sixth consecutive year.
“The pandemic shifts and resurgence of the residential rental market bring new residential supply into focus,” says Doug Ressler, manager of business intelligence at Yardi Matrix, RentCafé’s sister company. Apartment projections for 2021 are calculated using a Yardi Matrix proprietary algorithm that incorporates confirmed and likely completions based on certificates of occupancy. Projections are estimates and may change.
Ressler adds that this year’s figures reflect a shortage of entry-level housing and rising home prices, which are increasing demand for multifamily rentals as new renters enter the market and many millennials extend their rental tenure.
RentCafé tracks annual rental unit totals back to 2011, when 114,000 rental units were completed. Totals grew each year until peaking at 357,000 in 2018. Since then, completions fell to 341,000 in 2019, edged to 343,000 in 2020, and are estimated at 334,000 for 2021.
New York No. 2 and Arizona City No. 3
This year’s national ranking places New York second with 19,375 new units and Phoenix third with 15,846 apartments completed.
Markets such as Phoenix, Charlotte, N.C., and Orlando, Fla.—which were not major construction hotspots in the past—are now showing strong increases in projected new apartments, according to RentCafé.
The estimated 334,000 units slated to open in the U.S. by year’s end highlight the contrast between the recovery after the pandemic and the aftermath of the 2008 housing crisis. In 2021 there are nearly three times more apartments under construction than in 2011.
Compared to 2020, total new units represent only a 2.5 percent decrease, indicating that apartment construction has remained fairly steady despite challenges such as the pandemic, labor shortages, financing and permitting hurdles, and recent spikes in lumber prices.
Not all metros show growth. Six of the top 20 metros are seeing declines compared to last year. Notably, Denver is down 46 percent and Seattle down 19 percent—cities that were among the leaders in new apartment construction throughout the 2010s.
Although Dallas-Fort Worth remains the largest builder of apartments, it is among six regions that experienced significant slowdowns, with a 13 percent year-over-year reduction in projected completions. Other metros that failed to match 2020 levels include Austin (down 10 percent), Boston (down 5 percent) and Minneapolis (down 0.3 percent).
Conversely, some metros are showing substantial gains from last year. Charlotte and San Jose lead increases at 100 percent and 79 percent, respectively. The Charlotte, Orlando and Phoenix metropolitan areas are noteworthy surprises on the RentCafé list; each is expected to increase apartment supply by more than 70 percent, with Orlando projected to rise by 78 percent and Phoenix by 76 percent.
Aug 31, 2021 Realty News Report Copyright 2021
Photo: By Ralph Bivins, Realty News Report Copyright 2021
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File: Texas Leads Nation in Apartment Construction
File: RentCafé. Texas Leads Nation in Apartment Construction. Yardi Matrix. Phoenix. Charlotte