A multifamily shortage? New study promises at least some relief

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States across the Midwest, and the country, have long dealt with a lack of affordable housing. And a study from the National Multifamily Housing Council says that the United States needs to build 4.3 million new apartment units by 2035 to address the existing demand for multifamily properties.

A new study, though, says that some relief could be coming.

According to the latest Multifamily Supply Forecast from Yardi Matrix, the multifamily housing supply could increase by up to nearly 7% by the end of 2023. That won’t meet the demand for apartment units across the country, but it will help.

Yardi Matrix predicts that apartment completions will inrease by 6.9% in 2023 and 6.5% in 2024. In good news for those looking for more housing in the country, the under-construction pipeline continues to expand, and 2023 construction starts to date have not exhibited any signs of a slowdown.

For multifamily markets tracked on or before January of 2020, there are currently just more than 1.1 million units under construction. Of these units, 429,626 are currently in lease-up. Most of these units will deliver in 2023 or the first half of 2024.

As of this report’s release, Yardi Matrix is also tracking 688,420 under-construction units that are not in lease-up. This represents a 36.9% year-over-year increase and a 96.7% increase from pre-pandemic levels.

This increase, though, might be short-lived. According to Yardi Matrix, the number of construction starts and deliveries in the multifamily market will slow in 2025 and 2026 before construction activity rebounding in 2027.

Forecast completions for 2026 have been reduced by 5% to 401,065, while the forecast for 2027 and 2028 completions have been reduced to 417,378 and 426,722 units.

Yardi Matrix also listed the 15 markets that will see the greatest number of new apartment construction in the coming years. Austin, Texas, tops the list with an expected 24,145 new multifamily units in 2023 and 24,714 in 2024.

Also in Texas, the Dallas-North market is expected to see 12,977 new apartment units in 2023 and 11,179 in 2024, good for sixth on Yardi Martrix’s list. Right under it is the Houston-West market, with 12,612 expected new units in 2023 and 10,659 in 2024.

The only Midwest market on the top-15 list is Nashville, coming in at 13th on Yardi Matrix’s list. This Tennessee market is expected to see 9,542 new apartment units in 2023 and 10,942 in 2024.

Source: RE Journals