Via the People’s Policy Project, here’s a chart from a new Harvard study on rental housing in the US. It shows trends in vacancy rate for new apartment construction separated out by price point (rental rates).
Here’s what Chapter 4 says about the above chart:
Newly constructed high-end apartment properties became more difficult to fill last year. According to the Survey of Market Absorption, 10 percent of rentals completed in 2015 and priced at more than $2,450 remained vacant after 12 months. In contrast, only 2 percent of units with rents below $1,250 were still unfilled within one year. Apartment absorption rates fell most in the principal cities of metro areas, where most new supply has come online. In contrast, absorption rates were up in suburban and non-metro markets, where fewer new rentals have been added.
There’s a basic logic at work here about price and demand. Also, most new construction is at the high end of the market, and that’s how new construction works in general.
Given these rates, it might be interesting to brainstorm ways to reduce the costs for new construction projects, e.g. by removing parking minimums from multi-family zoning. Cutting down on costs by getting rid of the $30,000 cost of an underground parking spot makes apartments more affordable, even if they’re new.
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