Multifamily Unit Permits: Which Metro Areas are Booming and The Wisdom of Investing
Looking at some of the numbers posted in a recent article by National Real Estate Investor (NREI), you'd be hard pressed in some metro areas to be concerned about investing. Yet despite the large amount of permits issued for multifamily unit development, according to the NREI data, permitting levels are lower than peak levels of years past. Many large markets in the south did not make the cut for the “top ten” metro areas with the most permits issued, since their permitting has begun to slow following a previous boost in permits. The information collected looked at permits issued for the year ending this past July; it's also useful for those considering investing to see which markets are ramping up development and which may be slowing down.
For instance, Miami was at the bottom of the list but still landed in the Top Ten having 8,689 permits issued which meant a 43% year-over-year increase. Washington D.C. followed with 9,563 units, and rental growth by 1.9% is expected. Atlanta is one southern city that did make the list, beating the previous two cities with 9,828 permits issued; however, this was a 21% decrease in year-over-year. The upside is that Atlanta issued 1,105 of these permits in July alone, achieving the 4th highest total permits per month in the U.S.
We talked about Austin in a previous article as an up-and-coming market: here they show why by hitting the Top Ten with 10,565 permits for a 5.7% year-over-year increase. Rents are projected to increase by 2.5% next year as well. Chicago edged Austin out with a clean 11,000 units for an impressive 35.5% year-over-year jump. Denver marks the Top Five as another city we mentioned as a growing market. Denver had 13,200 permits issued for the largest year-over-year increase with a whopping 43.4%!
Seattle came in with 13,800 units for a comfortable 7.9% year-over-year hike and rent is expected to rise 8.3% which is the 2nd highest rate. Not surprisingly, Los Angeles made the list with 15,364 permits issued for a comfortable 10.6% year-over-year increase. Another southern market we mentioned was Dallas, which comes in at number two with 18,987 permits issued; however, this marks the second largest decrease in year-over-year. Dallas does have a projected rental rate increase of 5.5%. The Top Ten's Number One permit issuing spot goes to New York, with a staggering 30,350 permits: which is a 44% year-over-year bump.
These are the top ten booming metro areas for multifamily permits issued; with Miami's under 9,000 permits at the bottom of the list compared to New York's over 30,000 at the number one spot. Despite these impressive numbers, permits have slowed a bit when compared to previous years: and is it still a good time to invest? Our recommendation: Yes, but only with defensible cash flow and long, fixed-term debt. Take a look at the NREI slide show article for more on the numbers, and check back for our next article that focuses on the changing housing market and the new face of the 'burbs.