TD Economics Forecasts Strength in U.S. Multifamily Housing Construction Over the Next Five Years
Demographics, declining homeownership, and past underinvestment to fuel a strong recovery in multifamily construction in the South Atlantic; Northeast market poised for more subdued recovery
PORTLAND, Maine and CHERRY HILL, N.J., May 29, 2012 /PRNewswire/ -- TD Economics (www.td.com/economics), an affiliate of TD Bank, America's Most Convenient Bank®, released today a new research report outlining the positive prospects for the U.S. multifamily housing market.
Between 2009 and 2011, nationwide multifamily housing starts rose 59% while single family starts declined 2% as high unemployment, falling home prices and increased foreclosures strengthened rental demand. According to the TD Economics report, favorable demographics and years of underinvestment have primed the South Atlantic for a sustained rebound in multifamily housing construction. Meanwhile, the Northeast is also on a path of recovery, but will lack the South Atlantic's vigor because of slower population growth and lower rates of household formation.
Supply factors also favor the South Atlantic's multifamily housing rebound relative to the Northeast. Before the recession, the Northeast built relatively more multifamily housing units than the South Atlantic. The South Atlantic's deeper economic contraction, which led to a larger decline in multifamily investment during the recession, has compounded this supply gap. Overall this means the South Atlantic has less multifamily capacity to absorb during the recovery.
"While most South Atlantic states will outperform those in the Northeast, local factors drive housing markets and not all states will recover with the same gusto," notes Alistair Bentley, the TD Economist who authored the report. "In the South Atlantic, for instance, the fast growing states of Georgia and Florida have more potential than the more mature markets of Virginia and Maryland."
Lastly, because of the large lag times involved in constructing multifamily housing, the author cautions that some markets may one day find themselves saturated with too many multifamily units, especially in the slower growing Northeast. While Bentley "does not expect this to be a problem for several years," his report provides state level forecasts of sustainable investment trends across America's East Coast.
To view the full report, please visit: http://www.td.com/document/PDF/economics/special/ab0512_multifamily.pdf
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