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Apartment Market Boom - 9/10/14

America’s housing market is booming, but it’s not the market for single family homes, but for apartments.  According to the U.S. Census Bureau, over the last 12 months, builders have broken ground for buildings encompassing 332,000 apartments.  According to writer Floyd Norris, that is more than during any comparable period since 1989.  By contrast, construction of single family homes continues to recovery slowly. 

The number of single family homes that began construction over the most recent 12 months was more than 60 percent below the level of 2005 when the housing boom was at its peak.  During a recent 12-month period, apartment buildings accounted for 34 percent of all new housing starts, the highest share since 1974. 

In 2005, when the single family market was booming and the housing bubble was yet to burst, the share of apartments fell below 15 percent.  Today is of course very different from 2005.  People are not as sure whether or not homeownership is a good investment.  Mortgages are more difficult to obtain and down payment requirements have stiffened.  Income growth has been soft for many families and many young people are burdened with large quantities of student debt. 

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.