Multifamily Residential Construction is Booming, But There's a Long Way Yet to Go

This winter I wrote that multifamily housing had grown, as a share of total residential construction, to its highest rate since the 1980s. The idea was subsequently picked up by the Wall Street Journal in March and again a few days ago at the New York Times, both of which provided some additional context and slightly updated numbers. Although it varies month to month, multifamily housing—mostly apartments—currently accounts for about 40 percent of home-building activity in the US. That's good news for a country where about the same proportion of residents say they would prefer to live in denser, smart growth-type communities.

Although this has been framed as a multifamily boom of sorts, and it's undoubtedly a positive development, the truth is a bit more complicated. Apartments, condos, and townhomes are all doing well relative to single-family homes, but total residential construction remains far below its peak levels. In fact, despite a modest recovery from its nadir in 2009, new housing permits are still being authorized at a considerably lower rate than they were at any point between 2000 and the onset of the Great Recession in 2007:

So, although the relative share of multifamily construction is at a near-30-year high, the absolute number of units being built is about the same as it was through most of the 2000s, which weren't particularly density-friendly:

Building about 30,000 new multifamily units each month adds up to about 360,000-400,000 units per year, and that won't be enough. Not only do we already have a shortage of smart growth housing to the tune of about 8 million units, we also add about 2.5 million new residents to our population each year and we need the majority of them to choose energy- and mobility-efficient housing if we want to grow our economy in a sustainable way and limit our contribution to global climate change. The first step in allowing people to make that choice is building enough housing for that to even be an option.