Why the Boom in Rental Apartment Construction Isn't Helping Affordability
America is experiencing a rental apartment construction boom, with more than 1.2 million new units built since 2020 and nearly a million more expected by 2025, according to The New York Times. The New York area leads with 33,001 new units expected in 2023, followed by Dallas with 23,659, Austin, Texas, with 23,434, and Miami with 20,906. However, 60% of these new rentals are concentrated in the top 20 metros, where just 41% of U.S. renters reside.
Additionally, almost 90% of these new units are high-end, making them unaffordable for many renters. A recent report from RentCafe predicts a slowdown in new construction due to rising interest rates and increased material and labor costs.
And therein lies the problem: 60 percent of all new rentals are in these 20 metros, but only 41 percent of U.S. renters live there. And nearly 90 percent of these new rentals are high-end units — affordable only to the well-off.
Typical renters don’t have enough affordable options now, and it appears they won’t in the near future, either. The study predicts that development of new units will slow in coming years, reined in by high interest rates and inflated costs of materials and labor, which make future projects more expensive to finance and complete.