Perspectives

November 12, 2024

This chart shows the net result of subtracting the number of multifamily units completed in a year from the number of units started. A positive number means more units are being started than are being completed, and thus the future flow of deliveries will increase. A negative number means that new starts are less than completions, and thus the amount of units being added to the flow is less than than the amount being taken out.

Another way to look at it is this: Let's say there are 400,000 units in progress one way or another. This means the "pipeline" or flow of new apartments is 400,000. If 100,000 units are completed and no new ones are started, that means the pipeline of future deliveries drops to 300,000.

If during that same period 100,000 new units are started, the pipeline (and thus future supply) stays the same at 400,000.

To shift the analogy a bit, it's like a bathtub: even if you're adding 5 gallons a minute, you're losing ground if you're draining 10 gallons a minute out the bottom.

The glaring message in the chart below is that right now the multifamily pipeline is draining at a record pace. Completions are outstripping starts by nearly 200,000 units. You can't have completions without starts, so this guarantees that in the coming years apartment supply will dramatically dry up.

What then? Rising rents and occupancy.

Get them while you can!