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With Apartment Living on the Rise, Where Does That leave the Single Family Market?

More investors are putting stake in multifamily homes like apartments and condominiums, but are many people choosing to live in them? In the wake of low inventory in the single family market, are potential homebuyers going to continue to rent, or wait for their dream home?

Q4 of 2016 saw a rise in completion of multifamily homes, including apartments and condominiums, according to the most recent Survey of Market Absoption (SOMA), which is produced by the U.S. Census Bureau in conjunction with the U.S. Department of Housing and Urban Development.

Apartment completions—classified as buildings with 5 or more units—rose to 73,300 in the final quarter of 2016, a 9 percent increase year-over-year from 67,300. Similarly, condominiums and co-op completions were up to 6,500 from 3,200 a year prior. In the last two years, there have been over 250,000 new apartments entering the market, and the number of completed condominiums has more than double from 2014 to 2016—increasing from 8,000 units to 19,000 units.

Absorption, however, has been down for both apartments and condominiums. The number of apartments rented within 3 months of their completion was at a near-decade low—48 percent—compared to 55 percent a year prior. Absorption numbers haven’t been below 50 percent since Q4 of 2009.  Read More