Sep 11, 2023 - Development

NWA is booming with new apartments

Data: RentCafe; Note: Includes buildings with 50 or more units; Table: Kavya Beheraj/Axios

Roughly 2,826 new apartment units are expected to be built in Northwest Arkansas this year, as developers ramp up construction, according to a new report.

Why it matters: A housing shortage in the U.S. has contributed to the rising cost of both renting and buying.

What's happening: A surge in new apartment supply — 1.2 million units were completed during the pandemic — helped slow rent growth nationwide, but some parts of the country saw more housing being built than others.

  • The bulk of those new apartments are in 20 metro areas, where roughly 41% of U.S. renters live, per the report by RentCafe, which analyzed data from real estate intelligence service Yardi Matrix. (NWA ranks No. 37.)

The big picture: Many first-time buyers feel priced out of the brutal housing market.

  • Nearly three-fourths of renters say they're renting in an area where they couldn't afford to buy, according to a new survey from RealPage, a real estate analytics and software company.

Yes, but: Around 89% of the units completed from 2020 through 2022 are high-end, per the report, and not the type of affordable apartments many renters want.

Reality check: Affordability isn't the only reason people rent.

  • "Many renters will eventually buy homes. But in their current life stage, most renters are content to be renters" and enjoy the flexibility that comes with renting, RealPage chief economist Jay Parsons writes on LinkedIn.

What's next: 1 million rental units are slated for completion through 2025, but higher costs and other headwinds could slow developers' pace in future years.

  • "Tightening of bank lending standards — combined with rising costs of construction materials, labor and land — has made new projects harder to pencil," senior analyst Doug Ressler at Yardi Matrix says in the RentCafe report.

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