Apartment Construction Is Slowing And Investors Are Betting On Higher Rents Wsj

Apartment Construction Is Slowing, and Investors Are Betting on Higher Rents

The slowdown in apartment construction is being driven by a number of factors

• Rising interest rates are making it more expensive to finance new construction.
• The cost of materials has also been rising, making it more difficult to build apartments profitably.
• There is also a shortage of skilled labor in the construction industry, which is further driving up costs.

As a result of these factors, the number of new apartments being built has declined in recent months

According to a report from the National Association of Home Builders, the number of new apartments started in the United States fell by 10.1% in March 2023 compared to March 2022.

The slowdown in construction is good news for investors

As the supply of new apartments decreases, the demand for existing apartments will increase. This will lead to higher rents, which will benefit investors who own rental properties. Once the interest rates come down, the investors who prepare now will have a great lead in the market.

Investors are already betting on higher rents

A recent survey by the National Multifamily Housing Council found that 81% of investors believe that rents will continue to rise in the next 12 months. This is a significant increase from the 53% of investors who held this view in a similar survey conducted in 2022.

Conclusion

The slowdown in apartment construction is a major trend that is likely to have a significant impact on the housing market in the coming years. Investors who are betting on higher rents are likely to be rewarded for their foresight.

The current economic environment is creating a unique opportunity for investors in the apartment market. By taking advantage of the slowdown in construction, investors can position themselves to benefit from the rising rents that are likely to come in the future.