Cape Coral, FL—at risk from natural disasters—is permitting more
multifamily housing than anywhere else in the U.S. Austin ranks
second, but has seen a significant slowdown in permits
(NASDAQ: RDFN) —Builders obtained permits to construct 13
multifamily housing units for every 10,000 people in the U.S. so
far this year, down nearly 30% from an average of 18 during the
same periods in 2021-2023. That’s according to a new report from
Redfin (redfin.com), the technology-powered real estate
brokerage.
The report is based on a Redfin analysis of U.S. Census Bureau
data covering building permits for multifamily units in buildings
with five or more units during the first five months of 2024, and
the same periods in 2021-2023. National figures cover the entire
U.S., while the metro sections below cover the 79 U.S. metros with
populations of at least 750,000.
Multifamily building permits have dwindled not because they’re
harder to get, but because builders are seeking fewer of them. Here
are two reasons builders are seeking fewer permits:
- Elevated interest rates have made it more expensive to borrow
money for construction projects.
- There’s already a near-record number of new multifamily units
hitting the market due to a building boom in recent years, making
it difficult for some property owners to find tenants. Less than
half (47%) of new apartments that were completed at the end of last
year were rented within three months—the lowest share since
2020.
While multifamily building permits and starts have slowed
significantly—both have fallen below their 10-year historical
average—the number of units being completed is still at historic
highs. That’s because a lot of projects that started during the
pandemic are just now being finished. This backlog of new units
means property owners in many areas are competing with one another
for tenants, which is putting a cap on how much U.S. rent prices
can grow. Asking rents are up less than 1% from a year ago—a far
cry from the 18% growth seen during the pandemic—though they are
still at the highest level since 2022.
"Prospective renters should be aware that now may be a better
time to sign a lease than later,” said Redfin Senior Economist
Sheharyar Bokhari. “Property owners might start jacking up rents
again once all of the new apartments hitting the market fill up
with tenants and there’s no longer so much supply, which could be
the case in a year or two.”
Cape Coral and Austin Are Permitting More Multifamily Housing
Than Anywhere Else in the U.S.
In Cape Coral, FL builders got permits to construct 27
multifamily units per 10,000 people this year—the highest level
among the 79 metros Redfin analyzed. Next came Austin, TX (21),
Greensboro, NC (20), North Port, FL (18), Omaha, NE (17),
Nashville, TN (15), Tampa, FL (14), Orlando, FL (13), Dallas (13)
and Columbus, OH (12).
Many of these metros are in the Sun Belt, which surged in
popularity during the pandemic, fueling a building boom in the
region. Florida is home to four of the 10 aforementioned
metros.
Florida faces high risk from storms, flooding and sea level
rise, and is the epicenter of the housing insurance crisis. But
builders keep building because there’s still demand—partly due to
the influx of out-of-towners who moved in during the pandemic.
Permits may also be rising in Florida as homeowners continue to
rebuild after Hurricane Ian in late 2022.
The two metros with the fewest multifamily permits per 10,000
people are in California. In Stockton, CA, no permits were issued
in the first five months of the year. It’s followed by Bakersfield,
CA (0), Providence, RI (0), El Paso, TX (1), Baton Rouge, LA (1),
Cleveland (1), Fresno, CA (1), Detroit (1), Dayton, OH (1) and New
Orleans (1).
Multifamily Construction Has Slowed in Most Areas Since the
Pandemic, But There Are 25 Metros Where Permitting Has
Increased
Most metro areas have seen a dropoff in multifamily building
permits since the pandemic, with Austin posting the biggest
decline, despite still being the second largest permitter in the
nation. As mentioned above, builders in the Texas capital obtained
21 permits per 10,000 people this year—but that’s down from an
average of 40 in 2021-2023. Jacksonville saw the second biggest
drop (5 permits per 10k people in 2024 vs 23 permits per 10k people
in 2021-2023). Next came Colorado Springs, CO (7 vs 24), Boise, ID
(4 vs 17) and Raleigh, NC (9 vs 21).
Many of the aforementioned housing markets rose in popularity
during the pandemic and have since slowed, in part because many
people have been priced out.
On the other end of the spectrum, 25 metros are permitting more
than they were during the pandemic. Builders in Greensboro obtained
20 multifamily permits for every 10,000 people this year, up from
an average of just four in 2021-2023—the biggest increase among the
metros Redfin analyzed. Rounding out the top five are Cape Coral
(27 vs 16), Omaha (17 vs 10), Columbus (12 vs 7) and Tampa (14 vs
9). Refer to the report linked at the bottom of this press release
for full metro-level data.
Rents Are Falling in Many of the Metros Where Building Boomed
During the Pandemic
Median asking rents are down from a year ago in 16 of the 33
metros for which Redfin has rent-price data. In many of those
metros, rents are falling because multifamily construction has
ballooned, meaning building owners are competing for tenants. The
16 metros where rents are falling permitted an average of 14
multifamily units per 10,000 people in 2021-2023. By comparison,
the metros where rents are rising permitted an average of just
seven units per 10,000 people.
It makes sense to analyze permits in 2021-2023 (rather than
2024) when looking at current rent-price trends because those are
the units that have already hit the market, meaning they have had
time to impact rents.
In Jacksonville, the median asking rent fell 10% year over year
in May—the biggest drop among the metros for which Redfin has rent
data. Jacksonville was one of the country’s top permitters in
2021-2023, with an average of 23 multifamily units per 10,000
people. The story is similar in Austin, which was the nation’s top
permitter during the pandemic and saw asking rents drop 7% in
May—the third steepest decline among the metros for which Redfin
has rent-price data.
To view the full report, including charts and metro-level data,
please visit:
https://www.redfin.com/news/america-building-fewer-apartments-2024
About Redfin
Redfin (www.redfin.com) is a technology-powered real estate
company. We help people find a place to live with brokerage,
rentals, lending, title insurance, and renovations services. We run
the country's #1 real estate brokerage site. Our customers can save
thousands in fees while working with a top agent. Our home-buying
customers see homes first with on-demand tours, and our lending and
title services help them close quickly. Customers selling a home
can have our renovations crew fix it up to sell for top dollar. Our
rentals business empowers millions nationwide to find apartments
and houses for rent. Since launching in 2006, we've saved customers
more than $1.6 billion in commissions. We serve more than 100
markets across the U.S. and Canada and employ over 4,000
people.
Redfin’s subsidiaries and affiliated brands include: Bay Equity
Home Loans®, Rent.™, Apartment Guide®, Title Forward® and
WalkScore®.
For more information or to contact a local Redfin real estate
agent, visit www.redfin.com. To learn about housing market trends
and download data, visit the Redfin Data Center. To be added to
Redfin's press release distribution list, email press@redfin.com.
To view Redfin's press center, click here.
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version on businesswire.com: https://www.businesswire.com/news/home/20240709995508/en/
Redfin Redfin Journalist Services: Kenneth Applewhaite
press@redfin.com
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