Multifamily housing has been in the news quite a bit the last couple months, as analysts have pointed to the sector as one of the few bright spots in construction, if not the entire housing market, in recent months.
The latest data on housing starts continued that trend, with the 25 percent increase in multifamily units driving overall starts to their highest level in 19 months. And the latest data suggests that such numbers could become a new norm in 2012.
Multifamily projects typically take more than a year to complete, and as such, starts and completions operate in a delayed fashion. So, as these latest charts indicate from Bill McBride of Calculated Risk, as starts bottomed out in 2009, completions followed suit in 2010.
With distressed homeowners and recent college graduates increasingly turning to rentals, though, builders have flocked to the multifamily sector, and based on the latest data, starts for multifamily units will be up from 104 thousand units in 2010 to 170 thousand units in 2011, a 60 percent increase.
So though multifamily starts are operating from an irregular low (2011 may even be lower than 1993, the all-time low), such a dramatic increase indicates a big increase in completions to follow in 2012 to meet the new demand for multifamily units.
Summarizing the data, McBride wrote, “It is important to emphasize that even with a strong increase in multi-family construction, it is 1) from a very low level, and 2) multi-family is a small part of residential investment. But this is a very bright spot for construction.”