The country needs to build a total of 4.6 million new apartments by 2030 to solve affordable housing woes amid a lack of supply, according to a Hoyt Advisory Services study.
Non-profit groups National Apartment Association (NAA) and National Multifamily Housing Council (NMHC) commissioned the study, which aimed to determine the number of required units to meet demand until then.
Based on the total figure, property developers will need to build around 325,000 of new apartments per year. The figure represented a significantly higher number than the average of 244,000 units delivered between 2012 and 2016. Soaring prices for freehold land may be a challenge for investors and builder, although multifamily development loans from Bonneville Multifamily Capital and other financing options can help in building projects.
Aside from new construction, significant repairs may be necessary for 51% of the current inventory. Builders completed an estimated 11.7 million apartments before 1980, so it may not be surprising that these properties will require improvement.
New apartment construction will also help in lowering prices due to a short supply. The Commerce Department reported that multifamily construction starts fell 14.6% in April year over year, reaching just 328,000 projects.
Some cities will require more of the recommended supply of new apartments, as demand in these areas are increasing due to their rapid growth. For instance, demand in Raleigh, North Carolina, would climb 69.1% by 2030. The need for apartments in Orlando, Florida, and Austin, Texas, will increase 56.7% and 48.7%, respectively.
Similarly, New York City’s metropolis will have to add more than 278,000 apartments, while over 214,000 units will be needed in Houston.
The research should serve as a wake-up call for the industry to build more apartments, while the government should enact encouraging regulations to spur construction. These will help in solving the affordable housing crisis in the U.S.