Charleston, SC, Projected to See Biggest Increase in Apartment Construction This Year
Mouse over the map to see the projected apartment construction increase for each city.
Planning on living in an apartment for a few more years? You’re not alone – particularly if you live in the oldest city in South Carolina.
New apartment construction is expected to increase across the country over the next few years to accommodate strong demand for rentals. According to Apartment Guide data, the highest percent growth of new multifamily construction will be in Charleston, SC, with 2014 projected to see an 8 percent increase over construction in 2013.
According to Wendy Dorchester, senior regional sales director for ApartmentGuide.com, and Catherine Hontz, senior market sales manager for ApartmentGuide.com, Charleston's growth is largely due to the city's new Boeing plant.
"Charleston is a hotbed of activity," Hontz said. "The numbers are staggering compared to the rest of the state and nation for job growth, which is pretty cool."
Boeing broke ground on its plant in North Charleston in 2009, and operations started in 2011. It created about 20,000 new jobs in the area, and it's poised to continue its growth over the next several years. Google also has a presence in Charleston: a housing facility for data storage has created about 500 new jobs.
"Charleston is a grand coastal city," Dorchester said. "I just love the fact that Boeing decided to move across the country and open a second location here. We're so close to Atlanta and Charlotte, but it's on the coast and it's so beautiful here. It's wonderful to see our city grow."
Other metro areas expected to see a concentrated growth of apartments include:
- 5 percent projected increase: Birmingham and Montgomery, AL; and Boston, MA.
- 4 percent projected increase: Austin and Corpus Christi, TX; Madison, WI; Tallahassee, FL; Raleigh/Durham/Chapel Hill, NC; and Tuscaloosa, AL.
- 3 percent projected increase: Albany, NY; Denver, CO; Jackson, MS; Nashville, TN; Salt Lake City, UT; and Wilmington, DE.
According to David Crowe, chief economist for the National Association of Home Builders, in 2015 there are projected to be about 363,000 multifamily housing starts nationwide, well above the average of about 340,000. There are three primary reasons for the increased demand for apartments:
1. During the economic downturn beginning in 2008, not as many multifamily buildings were constructed, so builders are starting to catch up to the normal flow.
2. “Millennials” – people born between 1980 and 2000, also known as “echo boomers” – have shown a strong preference for apartment living.
3. Tight underwriting standards are making it difficult for people to buy houses, meaning many are continuing to rent. This is likely to continue until jobs are more secure and mortgages are more accessible.
“All the research I have seen about Millenials shows they are following the same path as young adults have done in the past,” said Jim Wilson, marketing research manager for ApartmentGuide.com. “It's just that there are nearly 80 million of them and due to the recession, they have stayed with their parents longer than the norm. Now they are starting to strike out on their own.
“They prefer renting at the young adulthood stage because it allows them the flexibility to be able to move quickly and inexpensively in pursuit of job opportunities," Wilson continued. "Renting is also much less of a financial commitment at an age when your wages are at a lower level.”
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Home sales are dropping
According to the National Association of Realtors, home sales in February were the lowest they’ve been since July of 2012. While the winter weather may be partially to blame, home sales have also been stifled by tight credit, high prices, limited inventory and rising interest rates. Many young people may want to buy their first houses, but many are held back by student loan debts.
Apartment vacancy rates are projected to edge up slightly between now and the beginning of 2015, as more apartments are being built to accommodate demand. According to the NAR, areas with low vacancy rates are considered landlords’ markets because high demand justifies higher rent. Currently, the areas with the lowest vacancy rates are:
- New Haven, Conn., at 2.1 percent;
- Minneapolis and New York City, 2.3 percent each; and
- Oakland-East Bay, Calif., and San Diego, at 2.5 percent each.
Photo credit: Bees Ferry, Charleston, SC