I don’t have a strong enough since of the dynamics and limitations in mulit-family starts to give a really good answer. However, I want to suggest based on the historical data the answer is: pretty darn high.
Here is a comparison of mulit-family housing starts to single family
Obviously analysts used to looking at the last decade are used to using words like “tiny” to describe multi-family starts as a part of the total picture. However, it wasn’t always so.
Look at the 70s and to a lesser extent the 80s. Multi-family is a big contribution. Its even more impressive when you consider that a few hundred thousand single families are built by owner or custom contractor, meaning they are not for sale or rent.
Looking at the market for-sale and for-rent, multi-family has been almost strong in the past as single family.
Given the current shortage of multi-family, the growing shortage of units generally and the burn that Americans and banks still feel from single-family I don’t see a fundamental reason why we couldn’t have a multi-family based boom.
That implies that we could see on the order of 1 million multi-family starts in the next few years. Its to early to “call” that but the fundamentals seem ripe for it.
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Monday ~ October 31st, 2011 at 2:46 pm
Aaron Wiegel
I think it would be beneficial for the United States to focus more on multifamily housing in the coming years. There’s only so much single family homes can help house the population in the suburbs, especially with high gasoline and energy prices, costs to the environment (smog, climate change) and costs from traffic congestion. At the same time, I wonder how much zoning and other local regulation (minimum parking requirements, etc.) may prevent the building of many multi-family dwellings. Perhaps in places like Houston, which are relatively unregulated, will see many more multifamily housing units compared to say, San Jose?
Tuesday ~ November 1st, 2011 at 1:14 pm
Tuesday links: a buy and sell price | Abnormal Returns
[...] Is the next housing boom going to be a multi-housing boom? (Modeled Behavior) [...]
Tuesday ~ November 1st, 2011 at 1:39 pm
Benny Lava
Very interesting. I suspect that we are short of multi family rentals due to the glut of Single families during the ownership society era. While one might say “why not rent a single family that is trying to sell but can’t?”. Well I think that question is also worth examining.
Thursday ~ November 10th, 2011 at 12:31 pm
Keep Watching the Shadow Households
[...] Karl Smith says that while multi-family housing currently makes up a very small slice of the housing market, there is a lot of room for growth. [...]