Los Angeles is now, by one measure, one of the most expensive big-city regions in the country. This is because LA, one of the busiest and fastest-growing large metro areas in the U.S., has been seeing a big increase in permits issued for multi-family residential projects.
According to Wall Street Journal, the Commerce Department data has revealed that out of the 10 busiest U.S. markets for home construction, the apartment industry has grown considerably. Wall Street elaborated that in the home construction market, those that grew the fastest in this year's first half from the same period a year ago, generated more than half of their construction as multi-family complexes rather than detached, single-family homes.
It was explained that the increase of the construction of multi-family rental properties is due to the outpacing of single-family, for-sale properties in the U.S. This means that although the U.S. gains in household formation, there is still a decline in its homeownership rates.
The Deputy Head of U.S. Economics for Bank of America Corporation, Michelle Meyer, stated that, "Multi-family construction is the main force behind the improvement in home building." She went on to say to Wall Steet Journal, "It reflects that rental rates continue to move up, and there is demand for rentals, particularly close to city centers."
The National Association of Home Builders estimates that the construction of an apartment unit supports the equivalent of one full-time job for a year, while the construction of a single-family home supports three.
According to a report by L.A. Curbed, the Commerce Department has revealed that only 20,000 residential units in the first six months of 2015 have been issued permits.
It was 41.4 percent up compared to the same time last year, and 72 percent of this year's permits were for units in big multi-family projects. This causes an issue as it leads to a "denser building" wherein a lot more housing in the same amount of space is being put up.
Los Angeles is at fourth place, after New York, Houston, and Dallas, in the issuance of housing permits for multi-family projects.
