Sell for More News is a weekly blog series with interesting information from the world of commercial real estate.
Last year, developers in the U.S. completed 211,000 new housing units in buildings of 50 units or more…the biggest number on record.
These numbers are from Characteristics of New Housing, an annual Census Bureau data release that is chock-full of interesting information. For example, 88% of apartments completed in 2018 had in-unit laundry.
The construction of multifamily housing in the U.S. used to be skewed much more toward smaller structures. In the 1920s, for example, more than a million new housing units were constructed in two-unit buildings. From 1999 to 2018 — twice as long a period — only 83,000 such units were built.
As recently as the 1980’s, more than 25% of all new housing units constructed in the U.S. were in buildings of 2-19 units. In 2018, that share was just 4%…a new low.
This “missing middle” phenomenon is being caused by growing regulatory burdens, rising construction costs and the increasing role of large institutional investors in housing-development finance which have tipped the scales in favor of big projects.
Zoning rules and opposition from would-be neighbors in residential areas have left urban commercial districts, suburban commercial districts and exurban greenfields as about the only locations open to new housing.
Note: An exurb is an area outside the (denser) suburban area of a metropolitan area, which has an economic and commuting connection to the metro area, low housing density, and growth.
Without the kind of incremental densification that smaller apartment buildings bring, municipalities have been left to choose between large-scale new housing development or no new housing at all.
Some city and state officials have been attempting to change this lately. Minneapolis got rid of single-family-only zoning. Oregon banned it in cities with populations of 10,000 and higher. Los Angeles, Seattle and other cities have loosened rules on the construction of additional units (aka granny flats) on lots with existing houses.
Housing construction in the U.S. has never been this polarized.
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About Beau Beach, CCIM
Beau is a tenacious Commercial Real Estate Broker, author and adoring father of four. His clients appreciate his no-nonsense demeanor and his legendary work ethic.
Beau leads Beachwood which is a commercial real estate broker for sellers in the Nashville, Milwaukee, South Florida and Chicago markets.
He’s the author of the books The 3 Reasons: Why Most Commercial Properties Don’t Sell and True Wealth: What Every Seller Should Know About 1031 Exchanges.
Beau can be reached at 800-721-3287, click to schedule a call or Beau@BeachwoodSells.com