Posted on 07/23/2017 9:31:01 PM PDT by Lorianne
No, the crane counters were not wrong. In 2017, the ongoing apartment building-boom in the US will set a new record: 346,000 new rental apartments in buildings with 50+ units are expected to hit the market.
How superlative is this? Deliveries in 2017 will be 21% above the prior record set in 2016, based on data going back to 1997, by Yardi Matrix, via Rent Café. And even 2015 had set a record. Between 1997 and 2006, so pre-Financial-Crisis, annual completions averaged 212,740 units; 2017 will be 63% higher!
These numbers do not include condos, though many condos are purchased by investors and show up on the rental market. And they do not include apartments in buildings with fewer than 50 units.
The largest metros are experiencing the largest additions to the rental stock. The chart below shows the number of rental apartments to be delivered in those metros in 2017. But caution in over-interpreting the chart – the population sizes of the metros differ enormously.
The New York City metro includes Northern New Jersey, Central New Jersey, and White Plains and is by far the largest metro in the US. So the nearly 27,000 apartments it is adding this year cannot be compared to the 5,400 apartments for San Francisco (near the bottom of the list). The city of San Francisco is small (about 1/10th the size of New York City itself), and is relatively small even when part of the Bay Area is included.
Other metros on this list are vast, such as the Dallas-Fort Worth metro which includes the surrounding cities such as Plano. Driving through the area on I-35 East gives you a feel for just how vast the metro is. However, I walk across San Francisco in less than two hours:
(Excerpt) Read more at wolfstreet.com ...
And it has an impact on the prices of these buildings. Apartments are a big part of commercial real estate. They’re highly leveraged. Government Sponsored Enterprises such as Fanny Mae guarantee commercial mortgages on apartment buildings and package them in Commercial Mortgage-Backed Securities. So taxpayers are on the hook. Banks are on the hook too.
The Dallas skyline has changed tremendously over the past few years because of all of the new apartment buildings downtown.
Many if not most of those are condos.
There aren’t any condos. At least by historical standards.
High tax rates, non-existent investment returns and required down payments have changed it all.
Which would you rather have? A 100mm apartment building earning 8MM per year, or 75mm in proceeds of sale which you can toss into the wind of investment risks and maybe, just maybe get 3mm in investment returns.
That was Obama's plan after all. The plan that Hillary was expected to follow upon her coronation.
How many apartments were built with the expectation that a democrat would win and we’d have open borders? And a continued demand for affordable housing.
Keep in mind that right now there are also thousands of boomers looking DAiLY to retire and often downsize.
Many markets will see a significant downward shift especially as interest rates start to climb.
Exactly - for all the illegals. That was the purpose.
The conventional wisdom is that in rent-controlled cities like New York, nobody wants to build any apartments. I think that NY law now allows construction of high-rent apartments as long as some low-rent apartments are provided as well. I wonder if that, or where permitted exclusively high-rent units, is what explains all the construction in rent-controlled cities like NYC and LA.
bkmk
I haven’t seen any rental prices dropping, only up and up.
The problem with Barry’s math is Trump got elected. The millions of new illegals to fill all of that section 8 are still south of the border.
Ah-pah-MINTs’ in surmise.
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