Builders, developers facing rising opposition, regulation
The market for multifamily housing is seeing strong demand but there are other factors in play that are concerning builders and developers.
“Multifamily builders and developers are seeing strong demand, but there are headwinds that have impacted further development,” said Steve Lawson, president of The Lawson Companies in Virginia Beach, Va., and chairman of the National Association of Home Builders (NAHB) Multifamily Council. “Some developers have had difficulty getting projects off the ground due to regulatory burdens and neighborhood opposition in certain parts of the country.”
That view is reflected in the latest reading of NAHB’s Multifamily Production Index which decreased in the second quarter of 2018 to 51 from 53 in the previous quarter. A reading below 50 would mean market conditions are worsening.
“Although the MPI is down two points in the second quarter, it is still above 50, reflecting a solid number of multifamily starts so far this year,” said NAHB Chief Economist Robert Dietz. “In addition to regulatory costs, developers still need to monitor the impact of tariffs and the threat of further trade restrictions on building materials prices, especially lumber.”
The component measuring low-rent units rose three points to 57, while the component measuring market rate rental units fell six points to 50 and the component measuring for-sale units dropped three points to 46.
