Five-Year Low Nationally
Apartment Construction in 2020 is at a five-year low nationally, Down 12% From 2019.
With the Covid-19 pandemic further complicating an already visible slowdown in apartment construction since its 2018 peak, new completions across the country are starting to mirror the downward trend following the 2008 crisis. According to Yardi Matrix, 283,114 new apartments are expected to be completed this year, a significant drop of 12% compared to 2019. The data refers to rental apartments in large-scale buildings of 50 units or more.
New Construction 2008-2020
Top Metro Areas
Miami Bust
Boom and Bust Highlights
- With 283,000 new units expected to hit the market this year, apartment construction dropped a significant 12% compared to 2019. The pandemic further complicates an already visible slowdown in apartment construction, bringing the supply of new apartments at a 5-year low in 2020.
- Overshadowing New York metro for the third consecutive year, the Dallas-Fort Worth area is first in the nation in terms of apartment construction, set to complete 19,300 new units by the end of 2020.
- 13 of the 20 most active large metros are expected to complete fewer units compared to last year. Miami metro is experiencing the biggest drop, 53%, down from a whopping 12,500 deliveries in 2019.
- The San Jose metro area leads the only 7 large metros projected to build more this year, with a 100% increase in new apartments. Despite doubling its apartment construction, Silicon Valley is adding a relatively low number for a giant tech hub, 5,800 units.
- At the city level, Austin is leading nationwide with the most apartment completions in H1, 3,800 apartments, followed by San Antonio, Denver, and Charlotte. Brooklyn rounds up the top 5, having delivered around 2,100 units, on par with Chicago.
In those areas where construction is artificially low rental prices will soar.
But in those areas subject to human flight, prices could crash. Illinois, NYC, and San Francisco are leading candidates of the latter.
Mish
I live in Denver.
Being down does not make me nervous.
Spec building has been running rampant these last 8 years.
If spec building was “running rampant”, 10-50+% of new builds would be torn down and replaced before any of them ever sold once.
Just as is the case in relatively free markets, like food and or electronics: A fair amount of output, is simply recycled or thrown in the trash. There exist no mature, even semi-free market, where that is not the case.
If every single ounce of meat were sold, we would be in an official famine. Which is exactly what we now are in, wrt housing, simply in order to enrich idle idiots too incompetent to do anything useful, at the expense of their productive infinite superiors.
Hence why people are, for no other reason than explicit policy, worried about becoming homeless simply from being evicted. Instead of simply finding another hamburger, or house to eat and live in.
Toothpick cities. We had some massive multi story apartments go up in the area I never seen so many 2×4’s in my life. For only $1500 a month you get to view the backside of the nascar grandstand, walmart and dozens of fast food joints.
Mortgage Delinquencies Jump by Most Ever. 60-Day Delinquencies Hit Highest Level Ever. Record 16% of FHA Mortgages Delinquent. What a Mess
The apartment building projects I see being built all over the mid-west are junk! Sticks and twigs is what I call them. Half brick (if any brick at all), cheap thin windows…with equally cheap prefab stick on walls. And the rents for these tossed together shacks..who pays this rip off rent??
It’s America!. Everything gets shittier and shittier, yet more and more expensive. It’s the American way by now!
Things cannot be otherwise, when every penny is being stolen from competent, productive people, and handed to idle idiots. Such that every decision maker, public as well as private, is now of the later kind: A rank idiot and nothing but. None of the dunces even have the brains to build something of any quality, even if they tried. And why would they try, when they are, to a person, too flat out stupid to even know the difference.
So….; we can’t build planes which don’t fall out of the sky. We can’t design a program to shield the population from a virus which near every other country has little problem with. And we can’t build decent housing. Simply because we can’t, period.
The only thing we can do, is sit there; dumb, incompetent and useless; while The Fed robs the dwindling few who still retain some semblance of competence at something, in order to hand us welfare. In the form if what useless, retarded little us have are flat out stupid enough to believe is “asset appreciation.”
Seen just now at The Daily Shot Editor:
This is certainly bullish for house prices, especially given the low inventory and declining construction.
Those people are probably all looking for cheaper apartments.
🙂
Of course. But they will have to share those cheaper apartments won’t they?
There will be millions evicted, those people will never be able to rent in their own name for 7 years. They will have to look for alternatives or roommates or whatever. Irony is you can still buy a house even with an eviction, it is renting that is hard after that. So the renters evicted are going to be forced to look at buying.
Zardoz put his finger on it, if the landlords evict tenants who WILL they rent to?
I feel lucky because I have been bitching about those 20 somethings down the street a few houses that were running a party house. Some nights they had as many as 12 cars in the driveway and parked on the verge. They had outdoor speakers and played cRAP “music” till well into the wee hours. One night just before 2 there was a lot of loud talk and a vehicle peeled out, must have been going about 70 by the time they got to the stop sign, about half an hour later I could hear it returning through the subdivision also at high rate of speed. BANG BANG BANG! Wiped out a street sign, a stop sign a small oak, and wrapped around a large oak. Woman was arrested and I think there were injuries.
All those bastards had a couple things in common, under 30 and collecting UI plus $600 per week PUA. They could not work of course because they might get Covid, but they could go to big noisy house parties.
Well, the week after the $600 ended I saw a UHaul in the driveway. The house is now vacant. THANK F’ING GOD! No more 3 a.m. partying.
But, there is a certain amount of housing stock in the country along with a relatively stable vacancy rate overall. If millions leave their units they will just have to go somewhere else. If the vacancy rate overall rises then that can only mean they are doing things like roommates or couch surfing, but that can only last so long. In other words, there is X amount of housing, and there are X amount of renters. Covid may shuffle them around some but it does not really raise or lower either number. So, at least temporarily I think a lot of people are gone back to mommy and daddy and again that will only be temporary.
Sure some are also buying rather than renting now, but that does not change the number of housing units available. Vacancy for owner and renter housing will rise, as people are foreclosed or evicted. But it just is not affecting prices at this point by much, if anything house prices to buy have risen.
I expect this to change as we clearly recognize we are IN a Trump depression. Right now people keep thinking that Covid is the problem and it will be over soon. It is the trigger but the underlaying problem is MUCH bigger. I also do not necessarily expect prices to fall either. A massive stagflationary depression is what I really expect. Later it may become deflationary, but at least for the foreseeable future watch as the system chokes on all that money.
The major screwup was to have an eviction moratorium AND give that 600. That should have covered most everyone’s rent and then some. Would probably be the best way to move forward if we don’t want the wheels to seize up for a bit.
600 on top of regular weekly UI is more than I get as a disabled veteran. I just thank god I saw rental prices going up last year so bought in the spring to lock in a monthly housing price.
As I said, Covid will shuffle things around a bit but it does not change the total number of people needing housing, nor does it change the total number of housing units in which those people need to live. Therefore it does not fundamentally change supply and demand.
So people had as much or more income PLUS the stimulus checks, and no requirement to pay rent or mortgages, 40% of renters are now behind in their rent, and 33% of mortgages are now behind on mortgages. The one statistic that stands out is the sudden drop in revolving credit balances. That can only mean they put all that money on credit card balances. And why not? No consequences for not paying for the roof over your head, a ton of cash in your account while you sit under that roof. They had every expectation that the gravy train would keep slopping ever more money into their accounts and they would not have to pay rent or mortgage till next year.
I am not saying that they were stupid, they did what the headlines told them was going to happen. Now, they are being evicted and foreclosed upon by the millions.
Many are moving out voluntarily rather than get an eviction, because it is very hard to rent anything with an eviction on your rental record for 7 years. But they have to go somewhere. As with any pyramid scheme the first to act are the only ones to profit. The rest are going to be homeless. Or begging from friends and family.
But landlords can’t just say well, the market is soft right now so I just have to lower rents (and standards). They have a payment to make themselves and cannot take a lower rent in most cases and standards were alreay low.
What it all means is that it will take years to untangle the ramifications of this Covid disaster financially, but one thing is certain, prices cannot drop without a crash in assets. As long as the Fed is backing all assets we will see inflation not deflation. And it is happening before my very eyes. Sale prices in the circulars are higher now than normal prices were last Dece0mber.
I found your story about the neighbors hilarious.
If covid stays around a while … and working remote continues … it will put the screws to landlords in high rent urban areas.
If things get cheap enough, I might live in a fancy SF high-rise for a year, just for giggles.
I was priced out of my home state California (North Bay) in 1991. It would be really nice if I could return to finish out my life. But even at 12 or 15% vacancy and rents meant to get anyone into the units I still could not afford SF. I remember looking at the jobs postings for city and county and seeing jobs I would expect to pay 70 or 80 thousand paying 170/180. And those people STILL had to commute. If you look up the city’s low income definition for a single head of household it is now (well 2018 most recent) According to fiscal year 2018 figures, “low income” status in San Francisco begins at $82,200/year for a single person, the highest in the country.
A single 100% disabled vet is compensated at $37,272 well under half of LOW INCOME!
We’ve had discussions a lot of the remote work is here to stay. Homebuilders are even building offices in new homes now.
We definitely have softness in the NYC apt market. Rents are down and vacancies are up. Know people taking advantage and coming into the city from the outer boroughs
Good Luck landlords!
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The US could be about to face a national housing crisis. Starting Aug. 24, millions of renters who were protected from eviction by the CARES Act will no longer be shielded. Combine that with the 30 million or so workers on unemployment who recently lost the $600 per week federal enhancement and have yet to start receiving the $400 per week allotted by an executive memorandum from President Donald Trump, and the result is that nearly half of all US renters may be at risk of eviction in the coming months, according to an analysis by Statista.
If further protections or assistance don’t come to pass, as many as 40 million people could be displaced from their homes over the next year, according to the Aspen Institute — all during the worst economic recession since the Great Depression. Some states may still offer temporary emergency eviction protections, but many, like California’s eviction stay, will end soon.
Even if they kick them out… who they gonna rent to?
Good question.
All those proponents of #cancelrent moratoriums don’t seem to realize that many landlords are (heavily) levered. If they don’t get the rent check, then how they are to pay insurance, mortgage, maintenance, and property taxes?
The landlord and the their payees are screwed already, because all the money they were playing with came from the tenants, and the tenants don’t have that money anymore.
There is no money for the rich at the top either way, so they need to relax and wait this out. If they put 30 million people on the street, they will get no money AND widespread rioting and looting.
The way things are going we might be out of this in a few months. People just need to calm the hell down and cut each other some slack. We can argue about who owes what to who when the proles have money again to make it all go.
In Idiotopia, The Fed will just pay them to keep as many people as possible homeless. That’s what central banks are for, after all.
While the other half of the hand-idle-idiots-all-the-loot-stolen-from-their-superiors duo, namely zoning boards, permitting this-and-that, and their child-brained, sycophantic, nimbyistic cheerleaders, will ensure productives will be unemployed as well, by banning them from simply building a place to live, in order to solve their entirely artificially imposed homelessness problem.
There are other layers of government besides the national government. Municipalities like LA are already instituting their own moratoria.
Dollars to donuts what Zardoz said comes to pass. Cooler heads will prevail.
“Dollars to donuts what Zardoz said comes to pass. Cooler heads will prevail.”
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You are both missing the point. SOMEONE is not getting paid. Who?
Moratoriums are not a free pass. Any and All rent not paid during moratorium must be paid at some point, unless landlord concedes. I’ve yet to hear any broad landlord concessions. If renter tells landlord to pound sand, then landlord might have to walk away … leaving municipal govt holding the bag (and insurance company, mortgage lender, maintenance providers)
A lot of people aren’t getting paid. Right now they have to settle for being housed and fed. Are you talking about people that aren’t being housed and fed? People make trouble when they aren’t housed and fed.
I’m not saying there won’t be a mess to clean up. But I really find it hard to believe the chosen mess will be 50 million evictees.
There may be some haircuts. There will probably be a lot of new debt. C’est la vie. It’s better than blood in the streets.
If your vision comes to pass, I don’t even think shotgun shells and cans of beans will keep their value.