The pandemic stopped many housing projects on their tracks – but a current report According to John Burns Real Estate Consulting, there are still opportunities to build new residential properties in both urban and suburban markets. The restriction according to the company: It depends on the timing.
The two most sought-after multi-family segments are short-term rentals – which John Burns defines as one to two year leases – that can serve local residents looking for housing and outdoor access. John Burns believes these opportunities will be best available in the suburban markets. Tenants seek larger units in these areas, typically two to three bedroom apartments. These tenants are less concerned about density, walkability, and access to amenities, especially since many restaurants, retailers, and bars are closed. The report highlights Uptown Charlotte as an example. The market has seen the highest concessions in the MSA while the more distant suburbs like Iredell and Gaston Counties have seen little to no concessions. John Burns expects the trend of suburban housing growth to continue.
In urban markets, on the other hand, there is the possibility of a social renaissance, with people looking for affordable housing that is close to employment offices, retail and entertainment activities, argues John Burns. These are longer-term rather than short-term rental apartments. Post-pandemic, younger residents will continue to flock to urban markets and employment offices as they did before the pandemic. This group is mostly made up of young millennials and older members of Gen-Z, a group that is currently between 20 and 30 years old and was born in the 90s. Once the labor market begins to improve, urban markets will return to attractive employment offices, thriving entertainment and retail areas, and likely affordability. While these markets are struggling today, the urban areas will have a positive future story once the recovery begins.
While there is hope for a recovery in housing demand and the need for new housing in the future, the demand for housing has changed rapidly during the pandemic. Current research by RENTCafe shows this Housing construction has decreased by 12% during the pandemic due to a combination of slower construction pace, labor shortages and construction bans. As a result, only 283,000 homes are expected to be delivered this year, well below the previous high of 2018 and well below the 321,000 units delivered in 2019. This applies at the national level, but some markets are pushing construction despite the pandemic. Dallas-Fort Worth, Texas, New York City and Atlanta continued to build. These markets also help to underline the information from the John Burns report: depending on the market and timing, there is still demand for new homes.