Rental Housing Inventory shortages are occurring in almost every market across the country. The supply of single family rental housing and apartments, relative to population growth, has been decreasing for the past several years and a new multifamily housing report now estimates that by 2030, some 4 million new apartments alone will be needed to keep pace with demand. That’s 325,000 new apartment units per year, to say nothing of single family homes. To put that in perspective only about 61,000 units have been built in each of the past four years between 2012 and 2016. And those were the good years, less that that was built each year between 2007 and 2011.
“Apartment and single family home rental rates are on the rise and are going to continue to rise at least through 2030. That means we’ll need millions of new apartments in the U.S. to meet the increased demand,” said Cindy Clare, chair of the National Apartment Association (NAA), in a statement on the report, released recently by the NAA and the National Multifamily Housing Council (NMHC).
The primary catalysts behind this need include a single family home building slump since 2008, ever more difficult financing requirements in the home-buying process and the formation of new renter households as a result of aging and immigration. One million new renter households, on average, were formed each year over the last five. “Renting is not just for the younger generations anymore,” said Dr. Norm Miller, principal at Hoyt Advisory Services, which collaborated with the NAA and the NMHC on the report. “Increasingly, baby boomers and other empty nesters are trading single-family houses for the convenience and appeal of rentals.
“Immigration also affects rents and home prices far more than it affects the labor market,” said Alex Nowrasteh, immigration policy analyst at the Center for Global Liberty and Prosperity at the Cato Institute, at the 2017 REALTORS® Legislative Meetings & Trade Expo in May. Nowrasteh pointed to increases in home values and rents that parallel population growth, much of it spurred by immigrants.
The report finds that increasing rental demand (and rental housing shortages) though widespread across the county, will be most felt in sought-after markets in the South and West, including Arizona, Georgia and Nevada, and in markets on the East Coast, such as in New York and Virginia. “The western U.S. as well as states such as Texas, Florida and North Carolina are expected to have the greatest need for new rental housing through 2030, although all states will need more rental housing moving forward,” Clare said. “There is a need is for all types of rental homes at all price points, especially normal affordable stock.”
Another recent report out of the National Low Income Housing Coalition (NLIHC) purports an inability for renters in every state, earning minimum wage and working 40 hours each week, to afford a two-bedroom rental, resulting in a shortage of 7.4 million affordable units for low-income renter households. Research by the Joint Center for Housing Studies at Harvard University affirms the need putting the shortage at 6.0 million.
Rental demand and rental rates should continue to increase through 2030.