6 ms·

Pretty much every major US city besides NYC, LA, and SF is dealing with a massive over supply of multifamily housing

by ethagknight 2y ago

selimthegrim 2y ago
New Orleans would like a word.
- ethagknight 2y ago
  New Orleans is hovering around 92% occupancy across the market at $1,273/mo average rent. Plenty of room for both to compress. Very healthy. https://mmgrea.com/new-orleans-2q-2024-report/ https://mmgrea.com/new-orleans-2q-2024-report/
  - selimthegrim 2y ago
    Have you looked up the average wage in Orleans Parish lately? Before the pandemic and Hurricane Ida, $1100/month was about the breakeven cost basis for one side of a shotgun. But I will read this report. Thank you for the reference. e: from your link - “Conversely, demand for workforce housing assets—which constitute about 37% of New Orleans’ apartment inventory—remains weak, indicating financial strain among lower-income households in the area. Construction Trends Construction has slowed significantly in the New Orleans multifamily market in recent quarters. The current pipeline of 752 units under construction represents just 1.1% of the existing rental housing stock, starkly contrasting with the national average of 4.0%. This limited construction is evident in the trailing 12-month total of new deliveries, which amounted to a modest 82 units”
    - ethagknight 2y ago
      NOLA is a unique market for sure but I’m told it’s had a difficult run. Weak demand across the middle market could mean a lot of things. I am not sure on the proposed correlation between lower income strain, my better guess is that it comes down to desirability of school district(s). Low “workforce” demand indicating bad public school options, only the rich sending to private schools and the poor taking what they can get.
mcntsh 2y ago
Objectively untrue.
- ethagknight 2y ago
  You want to provide citation or just say you are objective? Look at any major nation-wide multifamily housing market report. Not a crisis. It's just expensive in the most desirable locations. CBRE's headline: Slight Apartment Oversupply Expected in 2024 (oversupply means vacancy drops below the industry target of ~93%) >>The biggest wave of new apartment supply in decades will temper rent growth and improve affordability for renters in 2024. With delivery of 440,000 new units expected in 2024 and more than 900,000 currently under construction, the overall vacancy rate is expected to rise and rent growth to decelerate. https://www.cbre.com/insights/books/us-real-estate-market-outlook-2024/multifamily https://www.cbre.com/insights/books/us-real-estate-market-ou...
nothercastle 2y ago
Seattle needs way more housing. Every Major metro that’s growing needs more. Only oversupply is in dead zones
- ethagknight 2y ago
  Looks like Puget Sound market is running 93% occupancy, with 392,000 total apartment units in the market, thats 27,000 vacant units today. Very healthy market but not a crisis. https://simonandersonteam.com/wp-content/uploads/2024/11/2024-Q4-Puget-Sound-Market-Study_Simon-Anderson-Team.pdf https://simonandersonteam.com/wp-content/uploads/2024/11/202...
  - nothercastle 2y ago
    There is a finite limit to occupancy because turn around between tenants has to happen. 93% is probably the equivalent of completely full.
    - ethagknight 2y ago
      It’s not, 93% indicates a healthy market that is priced right between renters and landlords. My core objection is to the article stating “everyone knows there’s an affordability crisis” and I am saying there is not a crisis, its a manufactured talking point. For larger professionally (~50+ unit) managed facilities, which is what those reports track and is also what i do for a living, we can turn over very quickly and push much tighter, 98% when possible. 93% occupancy on a typical 200 unit property is 14 units vacant for an entire month, which is unacceptable if there is pent up demand.
      - nothercastle 2y ago
        What’s the optimal point for pricing? Is it better to fill to 98 and charge less or fill to 93 and charge more? We had some finds that lived in some odd the downtown units and their occupancy rate was quite low 70-80% because they were charging way above what people were willing to pay but they never adjusted. There are other factors at play that might be affecting average fill rate. Different plays seem to optimize for different rates.

Pretty much every major US city besides NYC, LA, and SF is dealing with a massive over supply of multifamily housing

selimthegrim 2y ago

New Orleans would like a word.

ethagknight 2y ago
New Orleans is hovering around 92% occupancy across the market at $1,273/mo average rent. Plenty of room for both to compress. Very healthy. https://mmgrea.com/new-orleans-2q-2024-report/ https://mmgrea.com/new-orleans-2q-2024-report/
- selimthegrim 2y ago
  Have you looked up the average wage in Orleans Parish lately? Before the pandemic and Hurricane Ida, $1100/month was about the breakeven cost basis for one side of a shotgun. But I will read this report. Thank you for the reference. e: from your link - “Conversely, demand for workforce housing assets—which constitute about 37% of New Orleans’ apartment inventory—remains weak, indicating financial strain among lower-income households in the area. Construction Trends Construction has slowed significantly in the New Orleans multifamily market in recent quarters. The current pipeline of 752 units under construction represents just 1.1% of the existing rental housing stock, starkly contrasting with the national average of 4.0%. This limited construction is evident in the trailing 12-month total of new deliveries, which amounted to a modest 82 units”
  - ethagknight 2y ago
    NOLA is a unique market for sure but I’m told it’s had a difficult run. Weak demand across the middle market could mean a lot of things. I am not sure on the proposed correlation between lower income strain, my better guess is that it comes down to desirability of school district(s). Low “workforce” demand indicating bad public school options, only the rich sending to private schools and the poor taking what they can get.

mcntsh 2y ago

Objectively untrue.

ethagknight 2y ago
You want to provide citation or just say you are objective? Look at any major nation-wide multifamily housing market report. Not a crisis. It's just expensive in the most desirable locations. CBRE's headline: Slight Apartment Oversupply Expected in 2024 (oversupply means vacancy drops below the industry target of ~93%) >>The biggest wave of new apartment supply in decades will temper rent growth and improve affordability for renters in 2024. With delivery of 440,000 new units expected in 2024 and more than 900,000 currently under construction, the overall vacancy rate is expected to rise and rent growth to decelerate. https://www.cbre.com/insights/books/us-real-estate-market-outlook-2024/multifamily https://www.cbre.com/insights/books/us-real-estate-market-ou...

nothercastle 2y ago

Seattle needs way more housing. Every Major metro that’s growing needs more. Only oversupply is in dead zones

ethagknight 2y ago
Looks like Puget Sound market is running 93% occupancy, with 392,000 total apartment units in the market, thats 27,000 vacant units today. Very healthy market but not a crisis. https://simonandersonteam.com/wp-content/uploads/2024/11/2024-Q4-Puget-Sound-Market-Study_Simon-Anderson-Team.pdf https://simonandersonteam.com/wp-content/uploads/2024/11/202...
- nothercastle 2y ago
  There is a finite limit to occupancy because turn around between tenants has to happen. 93% is probably the equivalent of completely full.
  - ethagknight 2y ago
    It’s not, 93% indicates a healthy market that is priced right between renters and landlords. My core objection is to the article stating “everyone knows there’s an affordability crisis” and I am saying there is not a crisis, its a manufactured talking point. For larger professionally (~50+ unit) managed facilities, which is what those reports track and is also what i do for a living, we can turn over very quickly and push much tighter, 98% when possible. 93% occupancy on a typical 200 unit property is 14 units vacant for an entire month, which is unacceptable if there is pent up demand.
    - nothercastle 2y ago
      What’s the optimal point for pricing? Is it better to fill to 98 and charge less or fill to 93 and charge more? We had some finds that lived in some odd the downtown units and their occupancy rate was quite low 70-80% because they were charging way above what people were willing to pay but they never adjusted. There are other factors at play that might be affecting average fill rate. Different plays seem to optimize for different rates.