What Comes First: Supply or Demand? (Part 2 of 4) via Property Management Insider

To what degree does demand drive supply, and is there a point of equilibrium?

Several years into the recovery from the Great Recession, apartment development activity has picked up across the country. In the core 100 U.S. metros, about 195,000 apartment units were completed in the year-ending Q2 2014. That’s about two and a half times the number of completions seen just two years ago, when rent growth was peaking. Since then, there have been widespread declines in rent growth levels, especially in the Midwest and Northeast regions, where weak employment growth adversely affected apartment demand. On the flip side, some of the nation’s hottest construction markets (particularly in the West and the South) are still posting big rent growth due to strong demand for lease-ups. Because of that, the U.S. apartment market overall has generally seen demand increase with supply for more than a year.

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