CORRESPONDENCE - WS-1 OPPOSITION

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20 ��' *X '4 .�k �j,a° aa;.c it ,r2.,fi. 5,,. � �' n x ➢}� oY While Completions Are Still on the Upswing, Starts of Rental Units Have Slowed Units Intended for Rent Thousands) 600 500 ago 300 200 100 0 1977 1979 1981 1983 198E 1997 1989 1991 1993 1995 1997 1999 2981 2003 2005 2007 2089 2911 2013 2015 2017 IS Completions . Starts Notes'. Date include both multifamily and single-family units, Estimate for 2017 is based on the four quarters ending in 2017:3 Source: Ji tabulations of US Census bureau, New Eesidential Ca emotion recent production of new multifamily units (which make up the lion's share of rental construction) is still slightly below the 420,000 unit annual rate averaged since 1960. Growth in single-family rent- als averaged some 390,000 annually from 2006 to 2016, supplement- ing new construction in meeting the sharp increase in demand. Although the national recovery has been robust, the pace of growth in multifamily construction varied widely across markets. Over the latest cycle from 2010 to 2016, multifamily starts added 15 percent or more to the multifamily stock in fast-growing metros such as Austin, Charlotte, Nashville, and Raleigh, but as little as 1 percent in slow- growing areas like Cleveland and Providence. The largest increases in multifamily supply occurred mainly in the South and West, where production was still catching up with rapid population growth. Overall, however, construction activity has begun to moderate (Figure 20). Indeed, multifamily starts are down 9 percent year-to-date through October 2017 on a seasonally adjusted basis. The slowdown was first evident in 2016 when permitting fell in nearly half of the nation's 50 largest markets. The five markets with the most multi- family permitting in 2013-2015 declined sharply, collectively regis- tering a 35 percent drop in 2016. This total includes declines of more than 50 percent in Houston and New York, as well as more moderate cuts in Dallas, Los Angeles, and Seattle. Permitting in other large markets, like Atlanta and Denver, continued to increase. Meanwhile, multifamily starts also fell in nearly half of the nation's 100 largest metros in the 12 months ending August 2017. By comparison, construction activity slowed in less than two-fifths of these markets just a year earlier. Multifamily starts were down across metro areas of all sizes, with the biggest declines reported in the South and Northeast. Even so, multifamily construction in many locations was still strong by historical standards. In the year ending August 2017, multifamily starts in nearly half of the nation's 100 largest metro areas exceeded their annual averages in the two decades leading up to the housing peak (1986-2005). In 26 of these areas, multifamily starts were up by more than 50 percent. Moreover, starts in several markets where multifamily construction had not fully recovered by 2017—including Jacksonville, Riverside, and Sacramento—remained on the rise. EASING MAINLY AT THE HIGH END With rental demand soaring, the national stock of vacant rental units shrank from nearly 4.5 million in mid -2010 to just 3.2 million in 2016. As a result, the rental vacancy rate fell sharply from 10.8 percent to 6.9 percent in the third quarter of 2016. However, the national vacancy rate rose to 7.2 percent in the third quarter of 2017, suggesting the rental market is at a turning point. Vacancy rates for professionally managed apartments in multifam- ily buildings are even lower. RealPage, Inc. reports a vacancy rate of 4.5 percent in the third quarter of 2017, comparable to those at the peak of the housing boom in 2006. Vacancy rates were under 4.0 percent in more than 40 of the 100 markets tracked, and under 3.0 percent in 16 markets.