Articles

RealPage reports significant absorption of apartment units across the nation, with the South leading the charge.

By Christine Serlin

Demand for multifamily housing continues to surge across the country, according to the latest multifamily report from RealPage Market Analytics.

“The impressive demand reading in the year-ending second quarter may be difficult to overstate,” said RealPage chief economist Carl Whitaker. “Some 390,000 apartment units were absorbed on net over the past 12 months. Dating back to the start of the new millennium, this latest annual reading ranks as one of the largest figures on record.”

Whitaker added that what’s most impressive is that 257,000 units have been absorbed during the first two quarters of the year, which is in line with the all-time high set in the pandemic-era demand surge that saw about 270,000 units absorbed in the first half of 2021.

While the gap is closing, the nation’s record supply of multifamily units continues to outpace demand. More than half a million market-rate units have been delivered in the past year, with an additional 629,000 units expected to deliver in the next 12 months.

According to RealPage, the narrowed gap is exhibited by stabilized occupancy and rent growth rates. In June, occupancy held steady at 94.2% for the third consecutive month. Year-over-year rents increased 0.2% last month.

“Though demand is arguably exceptional by historical norms, rent growth has yet to respond in a congruent manner,” Whitaker noted. “This ultimately points back to the interplay between supply and demand, whereby a four-decade peak in new deliveries is keeping rent expansion modest.”

Demand improvement was seen across all four regions in the year-ending second quarter, with the South dominating. RealPage cited some 226,000 units absorbed on net in the South in the past 12 months—this is nearly 60% of the total U.S. demand despite comprising just 42% of existing units.

The West recorded annual absorption of 89,000 units, which was its strongest annual figure in two years. The Northeast and Midwest remain more modest, with annual absorption figures of 30,500 and 44,100 units, respectively.

The Midwest is still leading the way for rent growth. Kansas City, Missouri, led the way with 3.8% year-over-year growth. Cleveland, Cincinnati, and Milwaukee also made the top five. Of the 10 major markets with annual effective rent growth of 2.5% or higher last month, all but one—Columbus, Ohio—posted concurrent annual inventory growth lower than the national norm.

Markets receiving the most new supply— Austin, Texas; Atlanta; and Dallas— experienced the most downward pressure on rents in June. Of the 10 major markets posting annual rents of 3% or deeper, they all had concurrent annual inventory growth above the national norm.

Population increases, job growth, and cooling inflation deliver good news for construction-related wholesalers, manufacturers and tradespeople serving the housing industry.

By Kerry Stackpole – The Wholesaler

Economic and real estate experts have forecasted a housing recovery in late 2024 through 2025, delivering good news to plumbing manufacturers, distributors and construction-related trades that serve the housing industry. Population and job growth, shifting demographics and cooling inflation in the United States are set to fuel higher home sales. At the same time, some challenges remain for the commercial and multifamily real estate markets.

Job growth — which has been positive so far this year — will drive long-term real estate demand. A strong job market typically means better worker pay, which translates to higher housing demand. The Bureau of Labor Statistics (BLS) shared an encouraging update in March: employers added 303,000 jobs, reaching above the average monthly gain of 231,000 over the last 12 months.

BLS also notes that total payroll jobs have increased by 5 million compared to pre-COVID-19 highs. Many workers who accepted new jobs this year plan on making major lifestyle changes that involve buying a new house or car, reported a ZipRecruiter survey.

With inflation expected to cool, lower mortgage interest rates over the coming months will help boost existing home sales. The National Association of Realtors (NAR) expects existing home sales to increase because 30-year mortgage rates have likely peaked, and the Fannie Mae Home Purchase Sentiment Index is improving.

The index is above 70 percent after hitting bottom at about 57 percent in 2022, reports NAR chief economist Lawrence Yun, Ph.D. In March, he presented an optimistic real estate outlook at the Plumbing Manufacturers International (PMI) Washington Legislative Forum and Fly-In. In its April housing market forecast, Fannie Mae projected that mortgage rates will drop to 6.4 percent by the end of this year and continue falling through 2025.

Experts believe that flattening rent prices will help reduce the Consumer Price Index (CPI); this price increase relief could allow the Federal Reserve to cut interest rates. Yun noted the CPI dropped to 3.1 percent in January, down from its 2022 peak of about 9 percent.

Strong Housing Starts Invigorate Building-Related Product Sales 

After the housing market experienced a recessionary phase that started earlier than the rest of the economy, existing and new home sales are poised to make headway. Permits for single-family housing starts are up across the country, with some states seeing accelerated growth. NAR expects housing starts to increase by 1.2 percent to 1.43 million in 2024, and by 4.9 percent to 1.5 million in 2025.

New home building will be particularly robust in Texas, Florida and Indiana, where single-family housing unit permits are up 44 percent, 27 percent and nearly 50 percent, respectively, ITR Economics’ Connor Lokar told PMI members during PMI’s April Market Outlook LIVE presentation. This improving housing trend will translate to higher wholesale volume and invigorated customer orders for plumbing fixtures, fittings and other construction-related items, he says.

Ultimately, NAR estimates that existing home sales will grow 9 percent to 4.46 million in 2024, and an additional 13.2 percent to 5.05 million in 2025.

The need for more housing has local governments getting creative by reconsidering lot size requirements, zoning laws and other policies. For example, the Washington Post reports that Sheboygan, Wis., is partnering with local employers, including PMI member Kohler Co., to build 600 entry-level homes — priced around $230,000 to $250,000 — to attract more front-line manufacturing workers. The county will also provide downpayment assistance to buyers.

Other cities — such as Portland, Ore.; Austin, Texas; and St. Paul, Minn. — have changed zoning laws that allow building up to four homes on one lot.

Growing Population, Life Changes to Sustain Home Sales

More people in the country and changing life events, such as retirement and job switches, are causing positive shifts in the housing market.

U.S. population growth is on the upswing, contributing to pent-up home-selling demand. In the U.S. Census Bureau’s January estimates, the nation’s population grew by 1.6 million to a total population of 334.9 million — reaching its highest level since the pandemic.

Yun cited life changes occurring over the next two years that will boost total home sales to pre-COVID levels: 7 million births, 3 million marriages, 1.5 million divorces, 7 million Americans turning age 65, 4 million deaths, 5 million new jobs created and 50 million job switches.

Generational buying habits are changing, too. Millennials have surpassed baby boomers to become the largest group of homebuyers at 38 percent, and Gen X buyers are the most likely to purchase a multigenerational home at 19 percent, according to the NAR 2024 Home Buyers and Sellers Generational Trends report. Baby boomers remain the largest generation of home sellers at 45 percent.

Millennials are selling because their houses are too small or their family situation has changed, while baby boomers and the Silent Generation members (born between 1928 and 1945) are selling to move closer to family and friends or because their homes are too big.

Challenges Still Ahead

Some challenges and concerns remain. Outlooks in the commercial, multifamily and remodeling sectors will not be quite as favorable, especially as the overall economy begins to soften later this year.

Sitting at about 3.5 percent on April 18, the U.S. inflation rate is unlikely to come down to the below 2 percent levels seen before the COVID-19 pandemic, Lokar explains, because of factors ingrained into the economy, such as government spending and the cost of labor. Commercial and nonresidential markets will lag, and multifamily housing demand will drop off in the short term.

Lokar notes a positive result from slow economic growth at the end of 2023 and early 2024: less supply chain pressure. While supply chain recovery is creating excess inventory issues, building material and plumbing product retail sales should begin to progress in late 2024 with improved housing fundamentals.

After a tense period of tight housing inventory with higher home prices and mortgage interest rates, it’s heartening to see rising housing starts and strong job growth. While our economy may face a few obstacles, we can use the forecasting information real estate and financial experts provide to pivot and innovate — as our industry has admirably done for decades.

This is an in-depth guide on Gallup’s first element of employee engagement:

This first element is a basic need for employees: “I know what is expected of me at work.”

The above statement seems straightforward and one that most people should be able to agree with confidently. But you might be surprised how many employees are fuzzy on exactly what their role is, often through no fault of their own.

Ensuring employees know what is expected of them goes beyond a basic job description or daily to-do list. Meeting this element of employee engagement requires clear and ongoing communication across the board.

This first element is a basic need for employees.

If an employee cannot agree with this statement, it is impossible for them to succeed in their role.

Learn more about the importance of this engagement element and how to ensure your employees know your expectations.

The Importance of Communicating Expectations

The importance of clearly communicating expectations may seem obvious, but many companies and managers neglect to do it anyway.

Even if you already know that communicating expectations is important, you might not realize just how important and far-reaching.

Day to Day Responsibilities

First, and likely the most obvious reason element #1 is important, employees need to know what they’re supposed to do daily. While some leaders may assume that certain responsibilities are implicit, everything must be explicitly stated.

When daily duties are unclear, things slip through the cracks. Employees turn a blind eye, assuming the task doesn’t fall under their duties. And when you ask an employee to do something they do not believe is part of their responsibilities, it creates tension and confusion. Employees may even point fingers at one another, making for an unpleasant work environment.

Ultimately, when you don’t properly communicate daily expectations, things don’t get done, and no company can function like that.

Role in the Organization

Workplace expectations aren’t just about tangible tasks. Workers also need to know where they stand with the company.

• Am I a manager?
• Do I oversee any other employees?
• What is my title?
• Who should I report to?

Any employee who agrees with engagement element #1 should be able to answer all these questions easily. They need to know their position in the company’s hierarchy to follow and give orders appropriately.

When expectations are not communicated, employees may unknowingly step outside their defined role. Clearly defining someone’s role within an organization not only helps them but also their coworkers.

For example, if you rely on one of your four accountants to manage the other three, that accountant needs a title that distinguishes them from the others. This prevents employee frustration and hostility.

By:  Alexandra Both, Senior Creative Writer with RentCafe

• Build-to-rent homes are having their most successful year on record: A total of 27,500 houses for rent were completed last year — 75% more than in 2022.
• Phoenix, Dallas and Atlanta are the top three metros for build-to-rent construction in 2023, accounting for nearly one-third of all units of this type added last year.
• The future of single-family homes for rent seems even brighter with more than 45,400 houses now under construction.

New homes built for the purpose of renting are having a resounding moment, rising high on the shoulders of hybrid work and Millennials who are reaching their prime nesting years, but who are also finding homebuying challenging. Combine renter demand with interest from institutional investors and well-established builders and it’s safe to say we’re witnessing this niche at its historical peak.

In 2023, nearly 27,500 build-to-rent houses were completed, an all-time high. What’s more, this was 75% more than the year before and triple the number in 2021. Of course, the appeal of living in a house with a private backyard (albeit a small yard, in many cases) seemed even more irresistible after the pandemic. As a result, the number of single-family homes for rent built every year jumped from an average of 6,600 in the pre-pandemic years to tens of thousands of new units each year after that.

This momentum has led to more than 45,400 build-to-rent houses now under construction that are expected to welcome renters in the next couple of years. While the bulk of these should open their doors in 2025, we anticipate a moderation of this fast-paced construction rush.

So, which areas are seeing the largest numbers of new build-to-rent homes? The Phoenix metro area led the way by far with more than 4,000 units completed in 2023, followed by Dallas and Atlanta. Then, Austin, TX, and Charlotte, NC, rounded out the top five metro areas with the highest numbers of houses for rent that opened their doors last year.

However, this adaptation of the American Dream is expanding beyond the traditional Southwestern markets and into Florida and even the Bay Area. In fact, nearly 8,300 rental homes are currently underway throughout Florida, while another 2,400 are under construction in California.

Build-to-rent boom: 14 of 20 top metros achieved 10-year highs

After 2022 marked a record year for build-to-rent development, 2023 exceeded expectations with close to 27,500 rental homes completed nationwide. And, more than half of these homes are in the top 20 metros with the largest number of units added last year, 14 of which achieved 10-year highs.

Phoenix is the reigning metro with 4,030 single-family homes for rent opening their doors in 2023, a 10-year high and an impressive 164% growth compared to 2022. Granted, Phoenix is blessed with the opportunity of building out, rather than up (like in major coastal locations), so this desert city continues leveraging the popularity of build-to-rent homes. Plus, the area is also one of the fastest growing in the country when it comes to population, which also helps new communities fill up before their official openings.

Next, Dallas followed with roughly 2,700 rental homes built in 2023, a slight decrease compared to the year before, but still its second-best year for build-to-rent construction in a decade. For context, Texas was the leading state for build-to-rent development in 2023 with nearly 4,800 houses for rent completed. The Dallas metro accounted for more than half of these units.

Then, the Atlanta metro was third in our top 20 with almost 2,000 single-family homes for rent completed in 2023 for another 10-year high. Here, too (like in most metros in our top 20), the build-to-rent construction trend really took off in the last five years. This translated into more than 3,500 single-family homes for rent built between 2019 and 2023 versus just 217 between 2014 and 2018.

Next up were Austin and Charlotte with 840 and 714 houses for rent, respectively, added in 2023. While the Texas metro saw a 159% rise in new units compared to 2022, the North Carolina renter hotspot marked a 13% increase in that same timeframe.

The Midwest was also well-represented on our list thanks to Kansas City, MO; Columbus, OH; Akron, OH; and Indianapolis. Seventh on our list, the Kansas City metro deserves a special mention after managing to ramp up its build-to-rent activity and open 636 new units in 2023 — a particularly notable jump compared to just 80 houses that were finished here in 2022.

On another note, Texas (4,800 units), Arizona (4,000 units), Florida (2,800 units), Georgia (2,181 units) and South Carolina (1,909 units) were the top five states for build-to-rent activity in 2023.

Newest build-to-rent houses are available in Texas, Florida and even California

In addition to privacy and extra space, renters are also drawn to single-family homes for rent because they’re new and decked out in up-to-date amenities. In fact, 41% of the total number of build-to-rent homes were built in the last five years. That’s about 68,000 rental homes.  

When it comes to the metros with the largest numbers of new houses for rent that were built in the last five years, Phoenix was again at the top with more than 9,300 units. Specifically, the Valley managed to quadruple its supply between 2019 and 2023: Close to 80% of the total number of houses for rent in Phoenix were added in this timeframe.

Texas had four metros in our top 20, starting with Dallas at #2 with more than 6,500 single-family homes for rent built in the last five years. That’s 62% of all homes for rent in the metro. Next were Houston at #4 with 2,400 units and Austin at #7 with 1,700 units. Not far behind was San Antonio, which came in ninth on our list with 1,300 houses for rent built between 2019 and 2023.

That said, Atlanta (third) and Charlotte (sixth) each deserve a mention for the most significant increases in their build-to-rent supply. Atlanta’s rose seven times in the last five years to a total of nearly 4,100 houses for rent, while Charlotte’s skyrocketed from just 185 units to more than 2,200 in that same timeframe. To that end, 92% of Charlotte’s single-family homes for rent opened their doors between 2019 and 2023.

Sunny California and Florida metros also ranked high on our list. More precisely, Jacksonville, FL, was 10th with close to 1,300 single-family homes for rent completed since 2019 while Tampa tripled its number of build-to-rent houses by adding 1,100 units in that same period. Out on the West Coast, the Riverside, CA, metro completed more than 1,000 houses for rent in the last five years to bring its total supply to more than 4,400 units.

Emerging metros for single-family houses for rent are in Florida, North Carolina

Nationwide, there are 32 metros with their entire build-to-rent supply completed in the last five years. However, more than half don’t have any new projects underway. For this reason, we selected the ones that had the largest numbers of built houses for rent and significant developments underway to highlight them as emerging build-to-rent markets.

First is Florida’s North Port metro with its 749 rental homes built between 2019 and 2023 and 994 currently underway. Next are Raleigh in North Carolina with 743 fresh homes and 355 more under construction, as well as Lakeland in Florida with 489 units already built and 317 more coming up.

Also in the South is Savannah, GA, which has 400 newly built houses for rent and 1,000 underway. Not to be outdone, Michigan’s Ann Arbor is also a new build-to-rent market with 267 rental homes opened between 2019 and 2023 and 632 more under construction. That said, none of these get even close to Huntsville in Alabama, which is getting ready to add almost 2,500 new houses for rent to its existing 262 units. Accordingly, the city is gearing up to become the largest in the state with the Port of Huntsville seeing immense growth, creating jobs and attracting new residents.

Texas has most build-to-rent units under construction, Phoenix is top metro for projects underway

After years of record completions, the wave of build-to-rent projects peaks this year with nearly 45,500 new houses under construction. The top five metros with the largest numbers of units underway — Phoenix, Dallas, Houston, Huntsville and Charlotte — account for half of the total volume.

Phoenix — the largest build-to-rent market in the country — will add more than 7,200 new houses for rent to its current portfolio of 12,400 units, further solidifying its status. Similarly, Texas metros Dallas (#2) and Houston (#3) are working on 6,500 and 4,800 new single-family homes for rent, respectively, by 2026. These will pile upon the current 15,600 units in the Lone Star State — the state with the most significant build-to-rent supply

Speaking of productive states, Florida stands out with four locations in our top 20 metros for build-to-rent homes underway. Specifically, Jacksonville, Tampa, Orlando and North Port have a total of 5,300 houses expected to welcome renters in the next couple of years. Also on our list, Salt Lake City; Nashville, TN; Columbus; and Savannah each have more than 1,000 new rental homes underway.

Meanwhile, sunny California is also well represented in our ranking with Riverside and Sacramento at #18 and #19, respectively, each with around 900 homes under construction. And, in the Mountain region, we have Denver, which is 20th on our list with nearly 800 single-family homes for rent to be delivered in the next two years, a significant jump compared to the 174 new homes added in 2023. As a matter of fact, nearly all of Denver’s total 1,300 units were built in the last five years.

Clearly, construction activity picked up significantly in the post-pandemic era. Even so, predictions outline a slight moderation in the pace of deliveries in the years to come.