Recent data supplied by the Commerce Department indicate that among the ten busiest markets for home construction, those that expanded the fastest during this year’s first half generated more than half of their construction as multifamily complexes rather than in the form of detached single family homes. The trend toward multifamily construction is both good and bad.
Renters can’t build wealth in their properties and the economic impact of apartment construction is less on a per unit basis than single family construction. As reported in the Wall Street Journal, the National Association of Home Builders estimates that the construction of an apartment unit supports the equivalent of one full-time job for a year while the construction of a single family home supports three. Here’s the good news.
It’s reasonable to assume that many of the young people flooding into the nation’s apartment market today will eventually find their way into homeownership, which implies a future boom for builders. But for now, it’s about the renters. In the New York metropolitan area, nearly nine out of ten units permitted for construction during this year’s first half will be in large multifamily projects. In Los Angeles the corresponding proportion is seventy two percent and in Miami sixty nine.
