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What Markets are at Risk of Multifamily Supply Overload?
A new report by Yardi Matrix indicates that multifamily deliveries might outpace demand in some key U.S. housing markets. The research revealed that deliveries in 2016 and 2017 helped compensate for the construction shortage in the wake of the Great Recession.
“Most of the metros that are at short-term risk of oversupply have strong economies and healthy multifamily demand, so units coming online should be absorbed by growing populations,” the report notes.
Markets and submarkets with outsize development activity, however, “can expect volatility” that will give rise to higher vacancy rates and stagnant rent growth. Achieving market equilibrium going forward will require developers to “intelligently calibrate the amount and location of new projects” to accommodate finite demand.
The risk markets identified by Yardi Matrix that could face oversupply over the next five years include Denver, Seattle, Dallas, Phoenix, Miami and Charlotte, NC. Demand is projected to exceed supply in Los Angeles, California’s Inland Empire, Houston, New York, San Diego and Sacramento, CA.
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- ◦Development
