{"id":6134,"date":"2024-04-25T14:05:33","date_gmt":"2024-04-25T14:05:33","guid":{"rendered":"https:\/\/returnsports.com\/news\/multifamily-permits-hit-10-year-low-return-sports\/"},"modified":"2024-04-25T14:05:33","modified_gmt":"2024-04-25T14:05:33","slug":"multifamily-permits-hit-10-year-low-return-sports","status":"publish","type":"post","link":"https:\/\/returnsports.com\/news\/multifamily-permits-hit-10-year-low-return-sports\/","title":{"rendered":"Multifamily permits hit 10-year low \u2013 Return Sports"},"content":{"rendered":"

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The hopes of California tenants that a wave of apartment construction might provide more rent relief may be fizzling in early 2024.<\/p>\n

Construction plans for multifamily housing plunged to a 10-year low, my trusty spreadsheet found after peeking at quarterly California building permit patterns from the Census Bureau complied by the St. Louis Fed.<\/a> Multifamily housing is primarily apartments plus certain ownership condos or townhomes.<\/p>\n

California permits approved for multifamily housing in the first quarter fell 22% below 2023\u2019s start to 8,972 units in this year\u2019s first three months. That\u2019s the slowest quarter for multifamily plans since the start of 2014.<\/p>\n

California developers cooled their building plans as interest rates soared, the economy slowed and folks no longer felt the pandemic-fueled need for larger living spaces.<\/p>\n

And let\u2019s not forget that California rents have flattened as vacancies increased. No amount of legislation or nudging will get developers to build when economic conditions aren\u2019t near-perfect.<\/p>\n

Sadly, the year\u2019s slow start contrasts sharply with a previously swift pace of multifamily housing construction in California.<\/p>\n

The first quarter\u2019s permitting ran 32% below the 2021-23 pace. In those three years, 159,476 multifamily units were in the works. That was the largest construction effort since 2004-2006. Yes, 17 years.<\/p>\n

Renter relief<\/h4>\n

A new supply of rentals helped to ease the pain of sharp rent hikes in the pandemic era.<\/p>\n

California rents were falling at a 1.4% annual rate in March 2024 after falling 0.8% for all of 2023, according to ApartmentList. Don\u2019t forget that rents statewide rose 11% in 2022 and 5.5% in 2021 as tenants sought larger living spaces as the coronavirus retooled life and the economy.<\/p>\n

Let\u2019s also consider empty California rentals and the options they provide apartment seekers. In 2024\u2019s first three months, vacancies averaged 5.2% vs. 5% in 2023 and 4% in 2022, according to ApartmentList.<\/p>\n

Some hope<\/h4>\n

California house hunters fared somewhat better. Developers of single-family homes, sped up their construction pace to meet demand for ownership properties.<\/p>\n

Single-family permits rose 26% in the first quarter to 14,215 units. But that was 7% off the 2021-23 pace. In those 3 years, 182,883 houses were permitted, roughly unchanged from the previous 3 years.<\/p>\n

Overall, California permits were 23,187 units in the first quarter, up 2% from a year ago but off 19% from 2021-23\u2019s pace. In those 3 years, 342,359 permits were filed, the best count since 2005-2007.<\/p>\n

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com<\/em><\/p>\n