After the housing market collapse, there is a construction boom — in apartments and single family rentals.
Over the last 12 months, the Census Bureau reported, builders have broken ground for buildings containing 332,000 apartments. That is more than during any comparable period since 1989. The figures include apartment buildings with at least five units.
By contrast, building of single-family homes has partly recovered, but only slowly, and the same is true for buildings containing two to four units.
The number of single-family homes started over the most recent 12 months was more than 60 percent below the level of 2005, when the housing boom was at its peak. But the number of apartment starts is now 7 percent higher than it was in 2005.
Construction of new apartment units has reached the highest level seen in a quarter-century, and the rental vacancy rate has fallen to the lowest level in more than 15 years. But construction of single-family homes, and of buildings with two to four units, is recovering slowly.
This is still a country where most people live in single-family homes. But over the 12 months through July, apartment buildings accounted for 34 percent of all new housing starts, the highest share since 1974. In 2005, when the housing market was booming, the share for apartments fell below 15 percent.
Now, with mortgages harder to get for many people with flaws in their credit history, and with others unwilling to buy after suffering losses when home prices collapsed in 2009, rentals seem to be in high demand. The Census Bureau says that the vacancy rate for rentals fell to 7.5 percent in the second quarter. That was the lowest vacancy rate since 1997.
During the most recent 12 months, construction began on 629,000 single-family homes. That is 48 percent more than the 426,000 such starts recorded during the worst period of the housing crisis, but it is still very low by historical standards. Since 1959, when housing start figures began to be collected, the only time starts fell that low was in 1982, during a brutal recession that was accompanied by high interest rates that made mortgages very expensive.
A month ago, after a disappointing June report of housing starts, some economists warned that the revival in home building was stalling. But in the July report, the government raised its June estimate and said the July figure was up as well. In addition, a survey of home builders showed they thought business was getting better, and the National Association of Realtors reported a gain in sales of existing homes.
Sales of new single-family homes peaked last summer, on a seasonally adjusted basis, and have since slipped a bit, adding to the worries that the housing market might be slipping.
To learn more about the build to rent market in your area, contact a member of the 9 Core Realty team!