2021 Apartment Construction Boom Overview
2021 was an incredibly strong year for apartment construction. According to Yardi Matrix, 334,000 units were projected to open in the U.S. by the end of 2021. As explained by Yardi Matrix, the number of projected units reveal a striking difference between the aftermath of the pandemic crisis and that of the housing crisis of 2008. In 2021, there were nearly three times more apartments under construction than there were in 2011.
According to RentCafé’s study, Despite Challenges, 2021 New Apartment Construction Tops 330,000 for 5th Consecutive Year, eight metros hit five-year highs of new apartments despite challenges brought forth by the pandemic. RentCafé analyzed construction of rental buildings nationally and included only those with more than 50 units. Furthermore, metros with fewer than 300 units in total, or fewer than two rental buildings, were also not included, leaving 109 metro areas to compete. The study listed Dallas, New York, Phoenix, Houston, and Los Angeles as the top five metros where the most rentals were built in the U.S.
- RentCafé reports new development in the Dallas metro area has been growing significantly in recent years, and the DFW metro landed at the top of the list, with 21,173 new rental units opening in 2021. Additionally, the study also noted that several large firms, such as financial services giant Charles Schwab, as well as the country’s largest commercial real estate services company, CBRE Group, recently relocated to the Dallas area.
- Second on the list of metros constructing the most rentals is New York. With 19,375 opening in 2021, New York metro saw an 11 percent gain over the previous year.
- Third on the list is booming Phoenix, with 15,846 new units opened in 2021. Phoenix metro experienced a year-over-year gain of 76 percent, an impressive climb after taking 15th place in 2019. The numbers prove that the Phoenix real estate market has not only recovered after a drop due to COVID-19, but demand has reached new heights.
- Fourth on the list is Houston, Texas. Houston added 15,760 new units in 2021, a 12% increase from 2020. With companies like Chevron, Direct Energy and Exxon relocating employees Houston, the Houston real estate market benefitted from increased demand. A hot real estate market like Houston is ideal for single-family rental property investors.
- Fifth on the list is Los Angeles where 13,682 units were added in 2021, a 9% increase from 2020. The real estate market in Southern California, and Los Angeles especially, has seen impressive growth since 2020, thanks to factors such as the desire for more space and historically low-interest rates.
Now that we have taken a deep dive into RentCafé’s report, which highlights the top producing metros for apartment construction in the U.S in 2021, we trust you feel informed and educated on which real estate markets are best to invest in, especially if you’re looking to invest in single-family rental properties. Were you surprised by this list?