U.S. Needs 4.3 Million More Apartments by 2035 to Address Demand, Deficit and Affordability
This article is provided by the National Apartment Association
U.S. Faces 600,000 Apartment Deficit, and 4.7 Million Fewer Affordable Apartments
Amidst demographic shifts and lingering pandemic-impacts on the population and broader economy, the U.S. faces a pressing need to build 4.3 million new apartments by 2035, according to a new study commissioned by the National Apartment Association (NAA) and the National Multifamily Housing Council (NMHC). Based on research conducted by Hoyt Advisory Services and Eigen10 Advisors, LLC, commissioned by NAA and NMHC, the data includes an estimate of the future demand for apartments in the U.S., including all 50 states and 50 top-metro areas, including the District of Columbia. For the purposes of this study, apartments are defined as rental apartments in buildings with five or more units. The data for the study is available on the website www.WeAreApartments.org.
The key findings made by the study include:
- Shortage of 600,000 apartment homes. The 4.3 million apartment homes needed includes an existing 600,000 apartment home deficit because of underbuilding due in large part to the 2008 financial crisis.
- Loss of affordable units. The number of affordable units (those with rents less than $1,000 per month) declined by 4.7 million from 2015 to 2020.
- Homeownership projected to increase. Apartment demand also factors in a projected 3.8% increase in the homeownership rate.
- Immigration is driving demand for housing. Immigration is a significant driver of apartment demand, and levels tapered before the pandemic and have remained low. A reversal of this trend would significantly increase apartment demand.
- Texas, Florida, and California in demand. These three states account for 40% of future demand and will require 1.5 million new apartments by 2035.
According to Bob Pinnegar, Chief Executive Officer of NAA: “Put simply, we do not have enough housing. The U.S. must build 3.7 million new apartments just to meet future demand, on top of a 600,000-unit deficit and loss of 4.7 million affordable apartment homes. It is time to reverse course after decades of underbuilding, and instead pursue responsible and sustainable policies that will not only meet this demand but address the missing middle and loss of affordable housing stock.”
In conjunction with the study’s release, the website www.WeAreApartments.org breaks down the data by each state and 50 key metro areas. Visitors can also use the Apartment Community Estimator – or ACE – a tool that allows users to see the trends in their state or metro area to determine the potential economic impact locally. A breakdown of Greater Los Angeles metro data follows:
- Los Angeles apartments and their residents contribute $178.5 billion to the metro economy annually, supporting 772,900 jobs.
- Spending from Los Angeles's 2.9 million apartment residents contributes $158.5 billion to the local economy each year (including $23.6 billion in taxes), creating 719,000 jobs.
- 59% of apartment buildings were built before 1980. Renovation and repair of apartments helps preserve Los Angeles’s older more affordable units, contributing $4.0 billion to the local economy annually and creating 14,000 jobs.
- The operation of the approximately 1.4 million apartment homes in the Greater Los Angeles area contributes $10.0 billion to the local economy each year (including $2.7 billion in property taxes), creating 15,000 jobs.
- Apartment demand is growing, and the industry needs to keep up. However, producing enough new apartments to meet demand requires new development approaches, more incentives and fewer restrictions. Los Angeles needs to build approximately 6,000 new apartment homes each year to meet demand. Apartment construction contributes $6.4 billion to Los Angeles's economy annually, creating 25,000 jobs.