There is much discussion of apartment overbuilding. Are too many apartments being built nationally or even locally? Is a correction facing the apartment industry? I’m asked this question, in one form or another, all the time. And I have an answer; one that on the surface might appear trite but I believe is nonetheless accurate.
My answer is this: we are not overbuilding apartments; we are creating insufficient jobs. I say this because if you looked at demographics alone, this country needs far more than the 235,000 or so apartments the industry will build this year. With a population of young people almost as large as the Baby Boomers coming out of college, and with the deterioration and abandonment of older rentals, it is pretty generally agreed that we need to add 300,000 net new apartments every year just to stay even.
The problem is that, as everyone knows, we are living through a jobless recovery. Unless this changes, unless a real recovery begins soon, we may indeed be producing more apartments than can be quickly absorbed despite overwhelming demographic demand.
Now there are many explanations of why our recovery has been so painfully slow, many provided by people a lot better trained in economics than me. But one thing on which almost everyone agrees is that the behavior of our federal government during the past two years has caused, or at least significantly contributed to, monumental uncertainty in the business community. The result has been a kind of widespread paralysis that has caused many business and non-profit executives to hesitate to add to their workforce.
So, as we sit here just before a presidential election, what is absolutely clear to me is that whoever is elected President, and whoever is elected to Congress, must have one single priority and that is to create an environment of predictability sufficient for business leaders to once again make long range plans. Everything else is secondary.
And to those of you who may read this, I implore you to keep this in mind on November 6th.