Multi-family Starts and Completions, Record Low Total Completions in 2011

Multi-family Starts and Completions, Record Low Total Completions in 2011

by CalculatedRisk on 12/20/2011 

Since it usually takes over a year on average to complete multi-family projects – and multi-family starts were at a record low last year – builders are on track to complete a record low, or near record low, number of multi-family units this year.

The following graph shows the lag between multi-family starts and completions using a 12 month rolling total.

The blue line is for multifamily starts and the red line is for multifamily completions. Since multifamily starts collapsed in 2009, completions collapsed in 2010.

Multifamily Starts and completionsClick on graph for larger image.

The rolling 12 month total for starts (blue line) has been increasing all year. It now appears multi-family starts will be around 170 thousand units in 2011, up from 104 thousand units in 2010. That is a 60%+ increase in multi-family starts – but from a very low level.

Completions (red line) appear to have bottomed. This is probably because builders have rushed some projects to completion because of the strong demand for rental units.

It is important to emphasize that even with a strong increase in multi-family construction, it is 1) from a very low level, and 2) multi-family is a small part of residential investment (RI). But this is a very bright spot for construction.

The previous record low for multi-family completions was 127.1 thousand in 1993. It will be close this year, however total completions will be at a record low – and the U.S. will add the fewest net housing units to the housing stock since the Census Bureau started tracking completions in the ’60s.

Below is a table of net housing units added to the housing stock since 1990. Note: Demolitions / scrappage estimated.

This means there will be a record low number of housing units added to the housing stock this year (good news with all the excess inventory), and that the overhang of excess inventory probably declined significantly this year.

Housing Units added to Stock (000s)
1 to 4 Units 5+ Units Manufactured Homes Sub-Total Demolitions / Scrappage Total added to Stock
1990 1010.8 297.3 188.3 1496.4 200 1296.4
1991 874.4 216.6 170.9 1261.9 200 1061.9
1992 999.7 158 210.5 1368.2 200 1168.2
1993 1065.7 127.1 254.3 1447.1 200 1247.1
1994 1192.1 154.9 303.9 1650.9 200 1450.9
1995 1100.2 212.4 339.9 1652.5 200 1452.5
1996 1161.6 251.3 363.3 1776.2 200 1576.2
1997 1153.4 247.1 353.7 1754.2 200 1554.2
1998 1200.3 273.9 373.1 1847.3 200 1647.3
1999 1305.6 299.3 348.1 1953 200 1753
2000 1269.1 304.7 250.4 1824.2 200 1624.2
2001 1289.8 281 193.1 1763.9 200 1563.9
2002 1360.1 288.2 168.5 1816.8 200 1616.8
2003 1417.8 260.8 130.8 1809.4 200 1609.4
2004 1555 286.9 130.7 1972.6 200 1772.6
2005 1673.4 258 146.8 2078.2 200 1878.2
2006 1695.3 284.2 117.3 2096.8 200 1896.8
2007 1249.8 253 95.7 1598.5 200 1398.5
2008 842.5 277.2 81.9 1201.6 200 1001.6
2009 534.6 259.8 49.8 844.2 150 694.2
2010 505.2 146.5 50 701.7 150 551.7
2011 (est) 430 126 46 602 150 452

Earlier:
• Housing Starts increase in November

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