Dozens of luxury homes are coming to major cities across the United States.
Analysts at Yardi Matrix have projected more than 400,000 units to be completed in 2022, and they expect another strong showing in 2023. Experts believe much of this new inventory has been built with upper-tier customers in mind.
“You often see new housing described as ‘luxury,’ in part because it is new,” said Ethan Handelman, U.S. Deputy Assistant Secretary of Housing and Urban Development. “When you get affordable housing, we need to provide some additional capital and/or rental assistance to help make that housing affordable for the people who need it most.”
Market price rents for new apartments can easily run into several thousand dollars per month. For many urban high earners, this is achievable. But for middle-income Americans, sky-high prices seem disconnected from reality.
“The market is structured not to include certain individuals. We need to acknowledge that,” said Dominic Mauldin, resource arranger at Organizing Neighborhood Equity DC.
Builders say that the high cost of housing in the US is linked to a large amount of regulation in the housing sector. For example, they say, many American cities are experiencing land shortages because of restrictive zoning codes.
“Currently, 40% of the cost of multifamily development is regulated,” said Sharon Wilson Gino, president of the National Multifamily Housing Council. “We have to do something about it if we are going to build more housing.”
In 2022, the Biden administration announced a housing action plan that aims to boost the housing supply within five years. But these efforts may not have a material impact on prices for some time.
“Unfortunately, I don’t think we’re going to see a significant drop in rents over the next year or two,” said Al Otero, portfolio manager at Armada ETF Advisors. “Developers can’t make a profit at those more affordable price points. So, we see development and new construction at the higher, higher end of the spectrum.”
Watch the video Above to find out why the US is inundated with new luxury apartments.
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