According to a comprehensive forecast by WeAreApartments.com, in collaboration with the National Multifamily Housing Council (NMHC) and the National Apartment Association (NAA), the United States is on the cusp of a significant housing challenge. To meet the escalating demand for rental accommodations, an estimated 1.9 million new apartment units will need to be constructed by the end of this decade. Our research delves deeper into these projections, focusing on the anticipated demand for apartment housing in key markets by 2030. This aligns with the initial assessment presented by WeAreApartments.com and its coalition of industry advocacy groups, which estimates the annual requirements for new apartment units from 2022 to 2035.
While the industry is poised to introduce a substantial influx of new units within the next 6 to 12 months, this short-term uptick should not be mistaken for a long-term solution. Rising interest rates are expected to act as a deterrent to further apartment development beyond the immediate horizon. This financial constraint will likely exacerbate the already pressing need for additional housing over the course of the next decade.
The prevalent factors contributing to housing shortages encompass a scarcity of available land for new community developments, cumbersome development restrictions stemming from zoning laws, and the complex regulatory obstacles confronting apartment developers.
Housing shortages exert a considerable influence on the local economy. The absence of affordable housing often compels individuals to reside farther from their workplaces, culminating in extended commute durations that intensify traffic congestion and diminish overall productivity. Moreover, the dearth of affordable housing can curtail consumer spending, as people grapple with limited financial resources for purchasing goods and services. Lastly, housing shortages can exacerbate homelessness, which, in turn, negatively impacts the local economy.
Advancing a more substantial housing supply relies on enacting zoning and land-use reforms. These reforms encompass measures such as facilitating the construction of higher-density housing, easing rigid parking requirements, and granting permissions for the creation of accessory dwelling units (ADUs).
Furthermore, addressing supply chain challenges assumes a critical role in strengthening housing provision. This involves improving the accessibility of construction materials, such as lumber, and offering incentives to motivate developers to embark on affordable housing initiatives.
Finally, favorable financing terms and options can reduce project costs, enhancing the viability of multifamily housing construction. Ultimately, improved financing liquidity fosters sector growth and addresses community housing needs, drawing more developers, boosting construction, and expanding the multifamily housing supply.
