The increasing popularity of condominiums is expected to continue in the coming year, driving construction starts of for-sale multifamily units to highs not seen for more than 10 years, according to David Seiders, chief economist of the National Association of Home Builders.
Speaking at a special session at the 2004 International Builders’ Show in Las Vegas on the economic outlook for the multifamily industry, Seiders said condos represented slightly more than a quarter of all multifamily development started in 2003 – a share that approaches that of the 1987 and 1993 booms in condo construction – and that rate is likely to continue to rise in 2004.
“Last year was the best year in history for home sales in general and condos have great appeal to those who want ownership as well as all the benefits of apartment living,” Seiders said.
As for the rental apartment sector, which has suffered from rising vacancy rates over the past two years, Seiders said a general upturn in the U.S. economy will help improve that market. “As payroll employment rises and unemployment falls, household formations will increase and the demand for rentals will rise,” he said.
Ron Witten, president of Dallas-based Witten Advisors, who presented an in-depth analysis of the national and local rental markets at the IBS session, also predicted improvement in the demand for rentals in 2004. According to Witten, apartment starts have outpaced demand in most markets, but additional household formations should be able to absorb much of today’s ample supply of rental apartments.
Witten identified Houston, Atlanta, Dallas, Los Angeles and Washington, D.C. as the cities he expects to have the largest number of rental apartments started in the coming year. But he sees Jacksonville, Fla., Los Angeles and Miami as the most favorable cities for rental development in the year ahead.
The National Association of Home Builders is a Washington-based trade association representing more than 215,000 members involved in residential and light commercial construction.
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