After the 2007–08 financial crisis, both multifamily and single-family home construction collapsed. But multifamily construction, unlike single-family construction, has since rebounded strongly. This recent aggregate strength has varied considerably across metropolitan areas: multifamily construction boomed in metros such as Austin, TX, and Charlotte, NC, but remained weak in others such as Pittsburgh, PA, and Chicago, IL. Jordan Rappaport examines potential drivers behind the recent variation in multifamily construction and finds that factors related to population, population density, and centralized employment played important roles. More specifically, he finds multifamily construction was stronger in metropolitan areas with larger populations, lower average population density, and more concentrated employment in the city center. These relationships appear to largely capture differences in metros’ productivity, urban amenities, and availability of land for development.
Publication information: First Quarter 2017