Characteristics of Apartments Completed 2009: Analytical Text
The Survey of Market Absorption (SOMA) measures how soon privately financed, nonsubsidized, unfurnished units in buildings with five or more units are rented or sold (absorbed) after completion. In addition, the survey collects data on characteristics such as number of bedrooms, asking rent, and asking price.
As with all surveys, estimates may vary from actual values because of sampling variation or other factors. All statements in this report have undergone statistical testing and are significant at the 90-percent confidence level.
Preliminary estimates from the Survey of Market Absorption show that, during 2009, a total of 164,300 privately financed, nonsubsidized, unfurnished rental apartments in buildings of five units or more were completed in permit-issuing areas in the United States. This total is about 18,600 greater than the estimated 145,700 completions in 2008 and 60,600 greater than unfurnished completions in 2007. Unfurnished completions in 2009 also exceeded similar completions in 2006 and 2005 (no difference between these latter two estimates). However, 2009 unfurnished rental completions show no significant difference from the 2003 and 2004 estimates, which did not differ from one another. (Table 8)
The South, with 58 percent, had the majority of new, unfurnished rental completions of any region, followed by the West, with 26 percent. The Midwest (10 percent) ranked third, while the Northeast had the smallest proportion (6 percent) of new rental completions in 2009. (Table 1 and Figure 1)
Two-bedroom units were the predominant size built, accounting for about 50 percent of newly constructed rental apartments, followed by one-bedroom units (40 percent). The third group comprised units with three or more bedrooms (8 percent), and the smallest group, efficiencies (no bedrooms), accounted for about 3 percent of new 2009 rental completions. (Table 1)
The median monthly asking rent for all unfurnished rental apartments completed in 2009 was $1,067– not statistically different than the $1,087 (in 2009 dollars; $1,091 in 2008 dollars) median rent for unfurnished apartments completed in 2008 (Table 2). One-bedroom units had a median asking rent of $950, about $157 less than that for 2-bedroom units, about $221 less than an efficiency unit, and about $294 less than a unit with 3-or-more bedrooms. Two bedroom units rented for about $64 less than efficiency units and about $137 less than units with three bedrooms or more. There was no significant difference in median asking rent between the efficiency units and the 3 bedroom or more units. (Table 2)
In 2009, about 33 percent of the completed unfurnished rental apartments had a median asking rent of $1,250 or more – by far the largest proportion of rental completions based on asking rent, followed by those renting for less than $850 (22 percent). Those units in the $950 to $1,049 rent range (14 percent) did not differ significantly from the 13 percent of completions in the $850 to $949 asking rent range but both exceeded the 10 percent of those renting for $1,150 to $1,249, and the 8 percent of those renting in the $1,050 to $1,149 range (no significant difference between these latter two). (Table 1)
The 3-month absorption rate for unfurnished rental units with an asking rent of $850 or less was 60 percent which did not differ significantly from the absorption rate for the units ranging from $850 to $949 and $950 to $1,049. However, the absorption rate for units renting for $850 or less exceeded the rate for units in the $1,050 to $1,149 range by 14 percent, the units in the $1,150 to $1,249 range by 15 percent, and by 18 percent the number of units renting for more than $1,250. There was a significant difference when comparing those units.
For those units renting for $850 to $949, the 3-month absorption rate was about 59 percent and did not differ significantly from those units with median asking rents of $950 to $1,049 or those units in the $1,050 to $1,149 range. The 3-month absorption rate for units renting for $850 to $949 did differ significantly from rates for the upper rent ranges. The $850 to $949 rate exceeded the rate for the $1,150 to $1,249 range by almost 14 percentage points, and the rate for units renting for $1,250 or more, by approximately 17 percentage points.
The 3-month absorption rate in 2009, for units renting in the $950 to $1,049 range exceeded the rate for units with an asking rent of $1,250 or more by about 10 percentage points. There were no other significant differences among three month absorption rates by median asking rent. (Table 2)
There were no statistically significant differences among 3-month absorption rates for unfurnished apartments built in 2009 based on number of bedrooms. (Table 2)
The majority (57 percent) of 2009 unfurnished rental units were completed inside principal cities of core based statistical areas (CBSAs), about 16 percentage points greater than the 41 percent built outside the nation’s principal cities. Only two percent of new rental units were completed outside CBSAs and were absorbed at a 3-month rate of 94 percent. This three month absorption rate exceeded both that of the rates for inside (47 percent) and outside (52 percent) principal cities, which did not differ from one another. (Table 3)
Of the 164,300 unfurnished rental apartments completed in 2009, air conditioning was available in 97 percent of the units, while about 82 percent had a swimming pool available. About 8 percent included electricity in the monthly rent, and about 6 percent included the cost of natural gas in the monthly rent. (Table 4)
Approximately 38,400 condominium and cooperative apartments were completed in 2009, about 32,700 fewer than similar completions in 2008. The Midwest, with 15 percent of new 2009 condominium and cooperative completions, had the fewest among the four regions. There were no other significant differences among the regions. Within 3 months, 40 percent of these 2009 condominium and cooperative units had been sold (absorbed). There were no significant differences among the 3-month absorption rates among the four regions. (Table 5)
The Northeast and South regions each had a three month absorption rate of 42 percent of the new condominium and cooperative completed in 2009 and were not significantly different from both the South (39 percent) and the West (37 percent) rates. (Table 5)
The median asking price for all new condominium apartments built in 2009 exceeded the upper level of the highest asking price range, and thus, cannot be compared to the 2008 median asking price (which also exceeded the highest range). Seventy-four percent of all new condominiums built in 2009 had two bedrooms or more. (Table 6)
Sixty-three percent of those condominiums built in 2009 had a median asking price above $400,000, a statistically larger proportion than in any of the other asking price ranges. There were no other statistical differences among the proportion of new condominium units by asking price range, nor were there any statistical differences among 3-month absorption rates for condominium units built in 2009 based on asking price range. (Table 6)
Approximately 259,800 apartments in residential buildings with five units or more were completed in 2009, not statistically different than the total completions in 2008 (276,600), nor statistically different from total completions in 2007 (253,000). Total apartment completions in 2009 were statistically less than those from 2006 by about 23,700 (completions in 2006 exceeded both those from 2005 and 2007). Sixty-three percent of 2009 completions were nonsubsidized, unfurnished rental apartments; 17 percent were subsidized and tax credit units; 15 percent were condominiums and cooperatives; 1 percent were furnished rental units; and the remaining 5 percent were not in the scope of the survey. (Table 8)
CHARACTERISTICS OF THE DATA
All statistics from the SOMA refer to apartments in newly constructed buildings with five units or more. Absorption rates reflect the first time an apartment is rented after completion or the first time a condominium or cooperative apartment is sold after completion. If apartments initially intended to be sold as condominium or cooperative units are, instead, offered by the builder or building owner for rent, they are counted as rental apartments. Units categorized as subsidized and tax credited are those built under two Department of Housing and Urban Development programs (Section 8, Low Income Housing Assistance and Section 202, Senior Citizens Housing Direct Loans) and all units in buildings containing apartments in the Federal Housing Administration (FHA) rent supplement program. The data on privately financed units include privately owned housing subsidized by state and local governments. Time-share units, continuing care retirement units, and turnkey units (privately built for and sold to local public housing authorities after completion) are outside the scope of the survey.
Tables 1 through 4 are restricted to privately financed, nonsubsidized, unfurnished rental apartments. Table 5 is restricted to privately financed, nonsubsidized, condominium and cooperative apartments, while Table 6 is limited to privately financed, nonsubsidized condominium apartments only. Table 7 covers privately financed, nonsubsidized, furnished rental apartments and Table 8 is a historical summary of the totals for all types of newly constructed apartments in buildings with five units or more. Estimates published in this report are preliminary and are subject to revision in the H-130, Market Absorption of Apartments annual report.
1Details may not sum to totals because of rounding.