Rental apartment construction booms in sellers’ markets — and NYC
Multi-family housing developers have benefitted from the recession and a tight lending climate, but rentals are often being constructed in areas with strong seller’s markets, according to apartment pipeline data from Axiometrics cited by the Wall Street Journal.
Areas with a true seller’s market – cities like San Jose, Calif., San Francisco, Austin and Phoenix – are seeing a surge in multi-family development because buyers are willing to rent while they wait for a more advantageous market.
In cities with a buyer’s market – such as Cincinnati, Cleveland, Providence, Jacksonville and Hartford, Conn. – multi-family developers are scared off by competition from the single-family housing market.
The trend runs against the conventional wisdom that rental apartments become more desirable in weaker housing markets.
However, New York City may be the most significant exception to this trend. Zillow rates New York as the country’s fourth strongest buyer’s market, yet multi-family construction is proliferating. There are some 111 new rental developments, containing approximately 40,000 apartments planned for the next few years, according to Axiometrics data, and Manhattan rents continue to rise. [WSJ]