Multifamily Housing Demand: 1980–2000

George Sternlieb and Robert W. Burchell

Real Estate Economics, 1979, vol. 7, issue 1, 1-38

Abstract: Using Annual Housing Survey data on multifamily structure occupancy by household type for 1975, together with number of household projections from the Department of Agriculture, a gross level of multifamily housing demand is projected. Allowance is made for a 2 percent replacement rate of the total stock as well as a 5 percent vacancy figure for new household demand. Assuming that: (1) there is no massive shift away from one‐family ownership to multifamily units, and (2) the present level of conversions from one‐family units to multiple occupancy continues to offset the trend of conversion from rental multifamily units to condominium status, then total future demand for multifamily rental units is well within current construction levels. We are presently building one and one‐half times the demand of 416,000 units per year projected for 1975–80. The demand from 1980 to 1990 decreases to 367,000 new units annually. This is further reduced to 335,000 units annually for the period 1990–2000. The major determinants of future demand will focus on the scrap‐page rate of extant facilities and the regional shifts of population. The future supply of multifamily structures depends on an abatement of construction costs and interest rates, and/or massive levels of Government subsidy. There is evidence that operating cost rises are challenging the financial integrity of multifamily structures. This is manifested by the HUD and private market mortgage delinquency and foreclosure rates. Policy focus for the future should emphasize the minimization of both construction and operating costs rather than augmented delivery rates.

Date: 1979
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