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Multi-Family Housing Activity Expected to Slow Down in 2020 After Long Run

Nov. 22, 2019
Multi-Family Housing Data for September 2019.

Multi-family housing starts are one of the more volatile indicators in the construction industry. They often swing from astronomically good to hear-a-pin-drop quiet. Dodge Data & Analytics estimates multi-family construction starts  increased +298% from 2009 and that they will drop -9% and -13% in 2019 and 2020, respectively.  At 2.3% of industry sales, multi-unit residential new construction sometimes gets overshadowed by single-family new home construction, which according to Electrical Wholesaling estimates accounts for 7.3% of industry sales through electrical distributors. But it can be a huge sales opportunity in some metros, where the business is absolutely booming with luxury apartments and condos stuffed with high-end lighting control systems, home theaters, security and other electrical amenities.

As EM’s editors were looking over the latest building permit data for multi-family units (click on green box below to see MSA data), we were blown away by how consolidated the activity is right now. Nine percent of all building permits pulled nationally for multi-family projects with five or more units is in the New York-Newark-Jersey City, NY-NJ-PA Metropolitan Statistical Area (MSA) with 29,635 permits through September, and another 13% is in three Texas MSAs — Dallas-Fort Worth-Arlington TX; Houston-The Woodlands-Sugar Land, TX; and Austin-Round Rock, TX, which have a total of 44,164 permits.
The 10 busiest metros for multi-family projects account for 38% of all the activity in the United States, while the top 25 account for 62% of the business. The 50 busiest MSAs in this niche account for 77% of the total.
With all this growth comes some wild swings in activity. For example, even though  the Austin MSA is ranked #5 with 9,197 permits, that’s 1,306 less permits than it had through Sept. 2018. Ranked #10, with 5,186 permits for projects with five or more units, the Atlanta MSA is down 3,269 units over last year.

At the 2020 Dodge Construction Forecast held last month in Chicago, Richard Branch, the company’s chief economist, presented some interesting information on senior housing, a very active segment of the multi-family housing market. With Baby Boomers now starting to enter these facilities, it’s definitely going to be a growth market over the next few years. Dodge data showed that through August of this year, 118,814 senior housing units were underway, with senior apartments (35,300 units); assisted living (38,655 units); and active adult projects (22,423 units) accounting for the largest share of the activity, followed by nursing homes, continuing care and adult day care facilities, in that order.

Check out the local market data in the map below by clicking on the metro of interest.

Click on the Green Button Below to See Our Ranking of Multi-Family Housing Permits Based on Year-to-Date Data through Sept. 2019