Apartment construction is slowing down this year in Miami
Renting is gaining more popularity year after year given the ever-increasing home prices which play a major part in hindering people from following the American dream. It’s not a secret that rent prices too have been increasing, however, they have remained affordable in most of the country. One of the contributing factors to the increase or decrease in rent prices is supply. If the market has enough rental apartments, prices tend to stagnate or even decrease. Renters interested in brand-new apartments should know that nationwide, apartment construction will actually slow down this year.
A new research from apartment search website RENTCafe.com shows that if last year the number of new deliveries reached a peak at 317,900 new units, this year that number is dropping to 282,900. Given the situation, rent prices will probably keep on rising as supply won’t be able to keep up with demand.
Rents have been increasing continuously during the past years without witnessing a decrease since 2010. Data from the first 6 months of 2018 shows that rents are starting to slow down a little bit, increasing by only 2.3% compared to last year’s 3.5%. It’s possible that they will continue slowing down, but the trend might also change course by the end of the year.
Miami metro is witnessing a decrease in apartment construction
Following the national trend, Miami metro will see a lower number of apartment deliveries in 2018 than it did the previous year.
Renters interested in Miami apartments should know that even though the supply of new apartments will be lower this year, there is still an impressive number of new construction available to choose from. To put things into perspective, last year’s deliveries in Miami metro reached 11,300 while the estimated number for 2018 is 9,800 new apartments. Home to employers such as American Airlines, JP Morgan Chase or Wells Fargo, Miami metro increased its population by 0.9% between 2016 and 2017. It’s also safe to say that a large share of the 51,000 new Miami residents will probably choose renting over buying a property and as the population is on the increase, the number of new apartments will not be enough to meet demand.
As far as rent prices go, the average monthly rent for an apartment in Miami was $1,635 in June, increasing by 0.6% month-over-month and 2.9% year-over-year. Many of the apartments built last year, for example, are high end and not affordable to the average person. Therefore, the metro needs more apartments but it’s also necessary for a high number of these apartments to be affordable.
Top metros where apartment construction is booming
The research also shows that some of the most expensive markets are adding the lowest supply of new apartments. San Francisco and Boston, for example, are building less than 6,600 apartments in 2018. On the other hand, as expected, New York metro is leading with the highest number of new apartments delivered this year, almost 20,000. It’s followed by Dallas metro with 17,000 and Denver with 15,000.
At a closer look, the New York City neighborhood building the highest number of apartments is Long Island City, which is planning to deliver an estimated 2,100 new units. Other neighborhoods within New York City, such as Williamsburg or Downtown Brooklyn are building about 1,900 and 1,100 apartments, respectively.
Apartment construction in Los Angeles metro is decreasing by 23% compared to the previous year. However, in Los Angeles alone, developers are planning to deliver about 4,600 new apartments, more than in Anaheim, Glendale or Long Beach. Camarillo is recording the lowest number of new deliveries in Los Angeles metro, adding only 317 new apartments to the market.
Phoenix metro renters should be happy to know that there will be almost 10,000 new apartments added during 2018 which is 55% more than last year’s numbers. The hottest markets for new apartments in Phoenix metro include Phoenix, with 4,153 new units, Tempe with 1,915 and Chandler with 1,075.
Austin metro is another example of how enough supply can help slow down prices. Apartment construction in the metro will reach 8,800 new units this year. Austin alone witnessed a 19% increase in apartment construction and is building 5,758 new apartments by the end of the year. The city’s high number of apartments has kept prices in check as they only increased by 0.2% in 2017. Another benefit for renters in the area is the fact that landlords are offering concessions in order to rent out the apartments. Other cities within the metro like Round Rock and Pflugerville added around 700 new apartments to their inventory.
At the bottom of the list we find Tampa, FL which is planning to deliver nearly 4,200 new units this year. Construction has been decreasing here as well compared to last year when developers built over 5,000 new apartments.
Metros with the highest change in apartment deliveries
The year-over-year change in apartment construction is highly noticeable in Denver metro where developers are building 150% more units in 2018. The metro will deliver almost 15,000 new apartments this year. Doug Ressler, senior analyst at Yardi Matrix shared his opinion regarding Denver witnessing such an impressive increase in apartment construction: “Denver is experiencing a lack of construction workers for multifamily and competing with office developers for labor resources. This was combined with a 2017 Mid-year decline in occupancy from 95.8% overall to 94.9% at Year-end.”
Sacramento will also add 143% more units to the market while New Orleans will build 85% more apartments than it did the previous year. Jacksonville metro as well as Phoenix metro are among the top 10 metros with the highest increase in population and they will both add over 50% more units in 2018.
Apartment living is a very popular choice nowadays for many reasons and it’s important to keep in mind that there’s a variety of factors influencing rent prices with supply being one of them. As new construction is lagging nationwide, renters should expect to see this reflected in their monthly rents.