Accelerating demand for mid-priced apartments has already surpassed last year

Demand for mid-priced apartments rated three stars has accelerated markedly in 2024. Demand for those units jumped 86% in this year`s first quarter from the same time a year earlier and 126% from 2023`s second quarter.

This surge in demand is reflected in absorption, a measure of the net change in occupancy. The 75,800 units absorbed in three-star-rated multifamily properties in the first half of 2024 have already exceeded the full-year total absorption of 60,000 units in 2023. While more expensive 4- and 5-star-rated properties still accounted for the highest levels of absolute demand, with 121,000 units absorbed in the second quarter, that’s an increase of only 40% from a year earlier.

When multifamily demand cratered in 2022, three-star-rated absorption finished the year in the red by 20,000 units. This was a stark turnaround from the 172,000 units of absorption recorded for those types of units in 2021.

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RSK: The demand is still great...and with the continuing influx of immigration right or wrong, it will not slow down anytime soon.

Ken Notes: In Madison we should create an "Earn A Story" program where a developer can earn extra height by developing lower cost units on the lower floors of a development.