Credit Crisis May Create Severe Lack of Apartments

Washington, DC, Jan. 26, 2010--Industry experts believe that the construction credit crisis will result in a severe shortage of apartments, according to a story in the New England Business Bulletin.

New multi-family construction has been socked by the credit crisis, leaving the industry unable to gear up for the increased need for market-rate and affordable apartments that is expected to accompany economic recovery beginning next year, experts said at the National Association of Home Builders trade show.

"We desperately need lenders to begin financing apartment communities again," said NAHB Chief Economist David Crowe.

"The vacancy rate for apartments is elevated now, but as the economy recovers and jobs return, the people who've been doubling up with relatives and friends will want a place of their own - and there may not be one available."

Building apartment communities requires up to three years. A large number of Generation Y professionals and newly formed households are expected to enter the housing market soon.

"Lack of debt and equity is crippling the private companies' ability to start new development. Over the last 10 years, our company built about 3,500 apartment and condo units a year. In 2009, we closed on one development deal, in December," said Jerry Durkin, managing partner of Wood Partners, Atlanta, a member of NAHB's Multifamily Leadership Board.