Multi-Housing’s Recovery Will be Fueled by Apartments, Not Condos

By Anuradha Kher, Online News EditorRaleigh, N.C.–With the multi-housing sector hit with depressed demand and unavailability of construction financing, the forecast for new construction until 2011 is not favorable, according to the FMI Construction Outlook: Second Quarter 2009 Report. The multifamily sector will build projects totaling $42.6 billion in 2009, which is a 15 percent…

By Anuradha Kher, Online News EditorRaleigh, N.C.–With the multi-housing sector hit with depressed demand and unavailability of construction financing, the forecast for new construction until 2011 is not favorable, according to the FMI Construction Outlook: Second Quarter 2009 Report. The multifamily sector will build projects totaling $42.6 billion in 2009, which is a 15 percent decrease from $50 billion in 2008 and is expected to remain flat in 2010 at $43 billion.“Despite the multifamily sector performing poorly, it is still running at much better levels when compared to the mid-90s when construction was down in the $30 billion range,” Heather Jones, a construction economist in FMI’s Research Services Group, tells MHN. The total residential construction (including single-family and multifamily) will be down slightly more in 2009 (19 percent) and will stay flat at 1 percent in 2010. Overal construction (including residential and non-residential) in 2009 and 2010 will be down 13 percent and 7 percent, respectively. “These numbers are for put in place construction, which is different from starts. It includes architectural fees, etc.,” adds Jones.While construction is expected to pick up by 2011, it will stay flat in 2012 and then pick up some more (8 percent) in 2013. When compared to the slump in the 90s, two things stand out about the multi-housing sector. “One is that the situation was far worse in the 90s. In fact, since 1993 to 2006 when the industry saw its peak, the sector hadn’t seen negative growth. In 2007, for the first time, there was a 4 percent drop. The other difference is that the positive growth seen up until 2007 was fueled by the condominium market, whereas the growth from 2011 onwards will come from apartments,” Jones explains.

You May Also Like