CoStar Insights

Too Much Multifamily? More Like Not Enough

by John Hogan | Aug 23, 2016
Tower Cranes

Take in the skyline of nearly any metro area across the US and you’re sure to see tower cranes hoisting steel beams into place. Since 2011, developers have been going hammer and tongs at the luxury apartment market, with new complexes seemingly springing up every night. CoStar’s research shows that 512,000 new apartment units delivered near downtown office hubs from 2011 to 2015, the highest number since the 1960s.

But even those without the numbers in front of them worry that the apartment market may be overbuilt. When we took a look at the data, though, we were surprised to find the opposite: the US looks like it suffers from a dearth of housing.

Since 2010, the U.S produced 3.8 million new housing units to house the 7 million new households that have formed over the same period. This equates to just 0.54 new housing units per new household, the lowest on record (shown below) and, in contrast to headlines proclaiming an oversupply of apartment units, constitutes a serious housing shortage—if not an outright crisis.  Landlords have celebrated by pushing rents up 6% in 2015, the largest increase in recent history, while home prices continue to post solid gains.

Multifamily Housing Shortage

If this data tells us anything, it’s “don’t stop building.” Selecting sites outside of downtown areas may be a good idea. Land costs are lower, and there's not as much competitive supply. Developers could find as much, if not more, demand for a quality mixed use development. 


This post may include "forward-looking statements" including, without limitation, statements regarding CoStar's expectations or beliefs, which are based on our current beliefs and various assumptions concerning future events and circumstances that are subject to change.  Actual results and events may ultimately be materially different.  All forward-looking statements are based on information available on the date published, and we assume no obligation to update these statements.  You should not construe this post as investment, tax, accounting or legal advice.