By Sam Tenenbaum, Head of Multifamily Insights, Cushman & Wakefield
As multifamily occupancies retreated through 2023, much attention was given to the looming wave of new construction. With more than 1 million units under construction at the peak in July of 2023—the most the U.S. has ever seen—the focus was understandable. Over the past year, the market experienced some of the strongest demand for apartments on record, second only to the post-pandemic surge. Now, with the construction peak in the rearview mirror or soon to be, the key questions are: What does this mean for multifamily moving forward? And which markets are ahead or behind the curve?
Where is multifamily demand coming from?
First, we need to establish why the market has experienced such strong absorption. Previously, Cushman & Wakefield detailed the growing unaffordability of the single-family market. At the time, this wasn’t reflected in U.S. Census Bureau data—homeownership rates were rising even as affordability collapsed. However, since mid-2023, the data converged with the situation on the ground: the overall homeownership rate has declined 30 basis points (bps) over the last year. This trend becomes clearer when indexing the homeownership rate by age, as homeownership typically increases with age, magnifying the observed decline.
Read more of Cushman & Wakefield’s multifamily supply analysis here.
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