How Can We Meet Future Apartment Demand?
The NMHC, in partnership with the National Apartment Association, recently launched the Vision 2030 campaign. This new educational and public relations effort focuses on the strong and growing demand for apartments from now through 2030. One of the program’s foundational pieces 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 13 years. Here’s the upshot: We’ll 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. Increasing 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 our research, we also released the 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 difficulty of building new apartments. The index ranges from 19.5 in the most-difficult market in which to add apartments (Honolulu) to -5.9 in the easiest (New Orleans). Any score above the median of 1.8 means it’s harder to add new apartments in a specific metro compared with other metros. But it isn’t just the labyrinth of local regulations and policies (such as land-use restrictions, zoning laws, entitlement processes, fees, and so on) that stymie the production of apartments. Just as problematic can be NIMBY opposition. These antigrowth 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, including mayors, city council members, and the like, often retreat from sensible plans to make their jurisdictions more livable and attractive to new businesses 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, frequently these same antigrowth zealots 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 mind-set, which some go so far as to call “dream hoarding,” is detrimental not only to housing affordability, but also 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 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 the 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 the Vision 2030 report, which presents a toolbox of approaches that states and localities can use to address the apartment shortage and help reduce the cost of housing. The toolbox presents four broad strategies: (1) Adopt public policies and programs locally 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.
(2) Increase public–private partnerships. Policymakers can provide incentives such as tax abatements or share risk with the private sector to produce the necessary units at price points households can afford.
(3) Leverage state-level authority to overcome obstacles to apartment construction. Sometimes this difficult process needs a boost, so some states, including Massachusetts, Rhode Island, and Oregon, have begun stepping in to override local zoning restrictions that inhibit apartment construction.
(4) 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 NIMBYism. 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; if nothing is done, housing affordability constraints will continue to hold back our local, state, and national economies. 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 the NMHC’s Apartment Community Estimator, an online calculator 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.