Shifting Apartment Markets: Top Permit-Issuers Change

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Shifting Apartment Markets: Top Permit-Issuers Change

Houston, Austin Give Way to L.A., Seattle

By Chuck Ehmann | Friday, February 3, 2017

The national apartment market has changed significantly since the end of the Great Recession, and the places issuing the most multifamily permits have, as well. There are about 20,100 permit issuing places in the Census’ survey, which include individual cities, towns, counties and other jurisdictions from which permitting data are collected. Roughly 5,000 permit-issuing places appear in the master table. Of those, about 1,000 have issued permits for at least five or more multifamily units within the past year.

The following set of tables lists the top 10 multifamily permit issuing places (and their metropolitan areas) each December since the recovery from the Great Recession began in earnest in 2012. Most of the places in the top 10 list are municipalities or cities, but a few counties (or boroughs) and unincorporated county areas made the list. Some of the cities that appear in the 2016 list are also consistently in the top 10 historically. The cities of Dallas, Houston, Los Angeles, Austin and Seattle have made the top 10 list each of the past five years, the apartment data shows.

Top Multifamily Permits 2012-2016

Other permitting places jump onto or off of the list for various reasons. For instance, the impending and subsequent expiration of New York’s 421-a tax-abatement policy caused a sudden surge in multifamily permitting throughout the New York metro area and caused the boroughs of Manhattan, Brooklyn and Queens to dominate the top 10 list in 2015. But they disappeared from the list by the end of 2016, according to apartment market research.

Charlotte’s Mecklenburg County appeared in the top 10 list from 2012-2014, as that area was one of the first to benefit from the moderate post-recession economic recovery and a dearth of new single-family construction. The individual cities of Denver, San Jose, Raleigh, Atlanta and Miami have worked their way onto the top 10 permit places list over the past five years, as well.

The City of Houston placed No. 1 or No. 2 from 2012-2014 but dropped to No. 6 in 2015 and No. 8 in 2016 as reduced demand from the oil-price collapse caused developers to pull back from this market. Unincorporated Harris County (essentially the area surrounding the City of Houston) made the top 10 list from 2013-2015, moving from No. 7 to No. 5 and back down to No. 9 before falling off the top 10 list in 2016 for the same reason.

Charting the top 10 permitting places from 2012-2016 reveals the drop-off from the No. 1 spot to No. 10 has been pretty consistent, again with the exception of 2015 (although the City of Houston was 60% higher than No. 2 City of Los Angeles in 2014).

Top 10 Permit Places Chart

The lines representing the top 10 permitting places each year are also close together in values, with 2015 showing itself to be the peak year for multifamily permits across the board, primarily due to the 421-a phenomenon. A total of 115,068 multifamily units were permitted in the top 10 places in 2015, followed by 76,563 for 2016.

Subtracting an estimated 30,000-35,000 multifamily units permitted because of 421-a that would likely have been spread out over the next several years (if at all), the remaining 80,000-85,000 units for 2015 still indicates a peak year. In fact, the cities of Dallas, Los Angeles, Austin and Seattle all permitted fewer multifamily units in 2016 than the year before.


Chuck Ehmann

Chuck Ehmann

Real Estate Economist

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