The new year is right around the corner, but before we end 2017, here is our last multifamily update of the year! Our kind friends at ABODO has provided us with data regarding the state of multifamily in December. There are some rent spikes, sharp decreases, and more multifamily units on the way next year.
Rent Changes This Month
Since last month, the national median rent for a one-bedroom increased by only $8, now sitting at $1,040 a month. This summer, Newark saw a hike in rent and it’s seeing another. The median rent for a one-bedroom increased by 12.9% this month. Following Newark is a new city on this list, which is Corpus Christi, Texas at a nearly 10% increase in rent. St. Paul also experienced a hike at 7.4%.
Some of the biggest decreases include Columbus, Madison, WI, and Santa Ana. We can infer that because Santa Ana is such a pricey market and more multifamily units are on the rise, rent has gone down.
Multifamily Construction Boom
Santa Ana is one of the most expensive rental markets in the U.S. but rent is declining due to the construction of new units. Los Angeles currently has an overwhelming number of units in the works—28,203 to be exact. Miami also has nearly 12,000 units planned, but how will this affect Florida’s housing crisis? Housing could potentially become more affordable if there is an inordinate number of units built. Overall, many cities with the highest rents in the country are expected to increase the number of units. However, this could lead to possible oversaturation, so rents might actually decrease! However, it’s expected that construction will slow down in the near future due to costs and the state of the economy.
Construction Loans Feasible?
Investors and developers love apartments, so with tightened construction loans, how will they finance these buildings? Well, good news, because it looks like banks are on board with apartments as well! It’s impossible for banks to completely cut off lending, so apartments are driving their real estate pool. The amount of construction loans have actually increased this year by a little over 9%. Despite the tightened terms, it is fairly feasible to secure a construction loan for apartments.
With a plethora of multifamily units planned for the future, we can expect that there is a chance of rent decreasing. Great news for renters! But not so great news for owners. On the other hand, developers and investors can remain cheerful this holiday season!