Multifamily Minute Reader Reflections: How Concerned Are You About Apartment Construction?
We asked our 45,000 Multifamily Minute subscribers about the coming wave of apartment completions. Here's what they said.
Start Your Application and Unlock the Power of Choice$5.6M offered by a Bank$1.2M offered by a Bank$2M offered by an Agency$1.4M offered by a Credit UnionClick Here to Get Quotes!With nearly three-quarters of a million units scheduled for completion between this year and next, it's not surprising that many multifamily investors have started to feel a little nervous. A spike in new deliveries, mixed with severely decelerating rents and rising costs, does smell like trouble.
We asked our Multifamily Minute subscribers how they were feeling, given the wave of deliveries that's upon us.
Survey Results
Our subscribers were asked to rate their level of concern about construction activity today, from a 0 (not at all concerned) to a 10 (extremely concerned). Further, we asked where their investments are located — in the Sunbelt region or elsewhere.
Property Location | Level of Concern |
|---|---|
Within the Sunbelt region | 3.5 |
Outside the Sunbelt region | 4.2 |
Combined | 3.9 |
On the whole, there's a bit of concern across the board — but those with properties outside of the Sunbelt seem a little more concerned.
This is an interesting result, because there's been a huge amount of discussion in the media how investments in Sunbelt markets may be more exposed to oversupply. Several leading minds in the industry remain rather bullish on Sunbelt markets, however, and for good reason.
One of the best breakdowns I've seen is from Jay Parsons, chief economist at RealPage. Parsons notes that while some Sunbelt markets are certainly at risk — take Nashville, for example — many others are not. And many of these metros will only face challenges in the short term, as massive demographic growth will lead to sustained absorption.
And, as he points out, supply issues are very local. It's not enough to say that Nashville or Philadelphia is facing too much supply. It's far more compelling and useful to look at the submarket level.
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Our Previous Survey
Curious about last week's survey? Last week we talked multifamily proptech, and which innovations have proved the most useful for you as an investor. Check out our analysis here.