Charlotte Area Needs 71,523 New Apartments by 2030 to Keep Pace with Demand

Industry News,
Growth is Due to Aging Population, Immigration, Declining Home Purchases

WASHINGTON, D.C., June 12, 2017 – An aging population, international immigration and fewer home purchases are resulting in an increased need for new apartments. The Charlotte metro area is expected to need 71,523 new apartments by 2030 to keep up with local demand, according to a new study commissioned by the National Multifamily Housing Council (NMHC) and the National Apartment Association (NAA). The study found that, nationally, 4.6 million new apartments are needed by 2030. This growth would increase economic activity in Charlotte and across the country.

It’s important to note that locally:
  • An average of 3,913 units were built annually between 2011 and 2016, and Charlotte will need to average 5,109 per year in the coming years to meet the expected demand.
  • Charlotte is ranked fourth out of 50 metro areas in terms of the percent increase (43 percent) of apartments needed by 2030.
  • There are currently 165,342 apartments in the Charlotte metro area, with residents that span the age and income spectrum.
  • Charlotte apartment developers, owners and managers and their residents contribute $5.1 billion to the local economy in annually.

“Nationally and here in Charlotte, we’re experiencing fundamental shifts in our housing dynamics, as more people are moving away from buying houses and choosing apartments instead. Charlotte is a well-located city with an excellent airport, as well as good economic prospects, led by continued growth in the professional services and trade sectors. These factors are anticipated to continue to attract significant migrations of new residents to the city, which will continue to boost local apartment rentals. Similar to other cities – including Raleigh, Orlando and Austin – older, more affordable rental units account for less than a fifth of metro rentals in Charlotte,” said Ken Szymanski, Executive Director, Greater Charlotte Apartment Association. “We will need to build new apartments to meet the expected increase in demand at a variety of incomes in our metro area.”

The increased demand for apartments is due in large part to:
  • The aging population. People 65-plus will account for a large part of population growth going forward across all states. The research shows older renters are helping to drive future apartment demand.
  • Immigration. International immigration is assumed to account for approximately half (51 percent) of all new population growth in the U.S., with higher growth expected in the nation’s border states. This population increase will contribute to the rising demand for apartments. Research has shown that immigrants have a higher propensity to rent and typically rent for longer periods of time.
  • Delayed house purchases. Life events such as marriage and children are the largest drivers of home ownership. In 1960, 44 percent of all households in the U.S. were married couples with children. Today, it’s less than one in five (19 percent), and this trend is expected to continue.

“Apartment rentals are on the rise, and this trend is expected to continue at least through 2030, which means we’ll need millions of new apartments in the U.S. to meet the increased demand. The western U.S. as well as states such as Texas, Florida and North Carolina are expected to have the greatest need for new apartment housing through 2030, although all states will need more apartment housing moving forward,” said NAA Chair Cindy Clare.

There will also be a growing need for renovations and improvements on existing apartment buildings, which will provide a boost in jobs (and the economy) nationwide. Hoyt’s research found that 51 percent of the apartment stock was built before 1980, which translates into 11.7 million units that could need upgrading by 2030. The older stock is highly concentrated in the northeast.

“The growing demand for apartments – combined with the need to renovate thousands of apartment buildings across the country – will make a significant and positive impact on our nation’s economy for years to come,” explained NMHC Chair Bob DeWitt. “For frame of reference, apartments and their 39 million residents contribute $1.3 trillion to the national economy. As the industry continues to grow, so will this tremendous economic contribution.”

Other highlights from the report include:
  • Demand is expected to be especially significant in Raleigh, N.C., where demand calls for a 69.1 percent increase in new apartment units between now and 2030, Orlando, Fla. (56.7 percent), and Austin, Texas (48.7 percent). Also notable, the demand in the New York City metro area will call for an additional 278,634 apartment units, Dallas-Ft. Worth, Texas (266,296 new units), and Houston, Texas (214,176 new units).
  • Propensity to rent is higher in high-growth and high-cost states.
  • Hundreds of thousands of new rental units will be needed by 2030 in states such as California, Georgia, Arizona, Florida, North Carolina, Nevada, New York, Texas, Virginia and Washington.