Copyright: Gemenacom
As many of you may have heard, NMHC, in partnership with the National Apartment Association, recently launched our Vision 2030 campaign. This new education and public relations effort focuses on the strong and growing demand for apartments from now through 2030.
One of the foundational pieces in this effort is a new research report, produced by Hoyt Advisory Services, that offers a serious, academic examination of the factors that will drive the sustained demand for apartments over the next 14 years.
Here’s the upshot: We will have to build 4.6 million new apartments between now and the end of 2030 to keep up with growing apartment demand-or risk exacerbating today’s existing housing shortage.
That means delivering an average of 325,000 net new units each year, after accounting for the estimated 125,000 units or so we lose every year to old age and obsolescence. For comparison, the industry has averaged just 225,000 completions per year over the past five years, which have been some of the most robust many of us have seen in our careers.
Growing production in step with estimated demand is a giant challenge. While there will be jurisdictions that will be more accommodative of the kind of growth and development needed, there will be others where this will be hard to achieve.
Barriers to Construction
As part of the research, we also released a Barriers to Apartment Construction Index for 50 metro areas. Taking into consideration local regulations, available land and other factors, this new tool scores the metro areas by the difficulty to build new apartments.
The index goes up to 19.5 in the most difficult market to add apartments (Honolulu) and all the way down to -5.9 in the easiest (New Orleans). Any score above the median of 1.8 means that it is harder to add new apartments in a specific metro compared to other metros.
But it isn’t just the labyrinth of local regulations and policies (e.g., land-use restrictions, zoning laws, entitlement processes, fees, etc.) that stymie the production of apartments. Just as important can be the Not in My Backyard, or NIMBY, movements. These anti-growth proponents can be vocal and aggressive in blocking development and redevelopment, if they feel new development threatens their way of life.
And the NIMBY pressure can be intense. Even well-intentioned policymakers like mayors, city council members and the like often retreat from sensible plans to make their jurisdictions more livable and attractive to new business and workers because the level of NIMBY noise is overwhelming.
Ironically, once a new apartment community manages to make it through the often excruciating approval process, it is frequently these same anti-growth zealots who are among the first to line up for apartments for their children. While they oppose affordable housing for their communities’ vital workers-teachers, first responders, health care workers, retail and restaurant employees-they also hypocritically want their children to have access to apartments that are both affordably priced and reasonably close to home.
This exclusionary mindset, which some go so far as to call “dream hoarding,” is detrimental not only to housing affordability, but to communities’ fundamental social and economic health. In fact, it has already crippled many cities across the U.S., most notably in California, where NIMBYism has successfully created a huge disparity between the supply of and demand for affordable rental housing.
Partners for More Production
But even in localities where better harmony exists between apartment developers and local residents, the magnitude and complexity of the challenge of meeting the upcoming demand for apartments is still too big for the private sector to take on by itself. We need local, state and federal governments to be our partners in meeting the growing apartment need.
To provide a starting point for discussion and collaboration, we’ve also published a Vision 2030 report that presents a toolbox of approaches states and localities can use to address the apartment shortage and help reduce the cost of housing. There are four broad strategies:
- Adopt local public policies and programs to make housing affordability more feasible. From “by-right” development and expedited approvals to reduced parking requirements and density bonuses, there are a number of policies and best practices that can help keep apartment development costs down.
- Increase public-private partnerships. Policymakers can provide incentives like tax abatements or share risk with the private sector to produce the necessary units at price points households can afford.
- Leverage state-level authority to overcome obstacles to apartment construction. Sometimes this difficult process needs a boost, so states like Massachusetts, Rhode Island and Oregon are stepping in to override local zoning restrictions that inhibit apartment construction.
- Collaborate with business and community leaders to champion apartments. Without a diversity of housing options to meet a variety of lifestyle needs and price points, local economies will suffer. Local employers and community leaders need to be engaged to create a powerful force against NIMBY opponents.
Cities and communities that embrace this more collaborative, we-all-win-together mentality will be the most successful in creating an environment where we can build enough new apartments to meet the need going forward. The repercussions of inaction on this front are great; otherwise, housing affordability constraints will continue to hold our local, state and national economies back. A healthy housing market is critical for attracting both new businesses and new workers to communities.
For more information on this campaign, as well as access to apartment data by state, 50 metro areas or congressional district, please visit www.WeAreApartments.org. The site also features our Apartment Community Estimator, an online calculator tool that values the economic impact of building and operating apartments in local communities, and printable fact sheets for your next meeting with local officials or state or federal lawmakers.
