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austin is still one of the hottest cities in the us for new build apartment complexes.

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Surge in Bay Area apartment construction during Covid

Demand still outpaces supply, despite accelerated construction in Mountain View, San Jose and Oakland which stands at its highest level in 5 years.

The San Jose metro shows the strongest signs of growth, adding 5,625 units this year, up 79% on 2020. San Francisco and East Bay have added 36% more apartments in the same period. However, these areas still fall behind Austin, Atlanta and Miami for new construction.

Wells Fargo economist Mark Vitner says there's been a quick rebound in the apartment market, which hit pause during the pandemic. But with rents in the Bay Area projected to rise 5-10% over the next 12 month period, the southwest will continue to prove popular with ex-Californians.

Back on track

The big leaps in housing construction suggest that the industry is back on track after the enforced shutdowns of 2020. But while the Bay Area remains stuck in a housing crisis, despite the flurry of new activity, rivals in the South and Southwest are beginning to outstrip the innovation capital of the world.

Rents in the Bay Area are currently some of the highest in the US and the Covid-19 pandemic has pushed them even higher. Despite that, 70% of new apartment construction in the Bay Area are luxury or near-luxury level although the construction of affordable housing has been limited as non-profits hunt for scarce government subsidies.

However, according to Doug Ressler of Yardi Matrix, the market is showing definite signs of resurgence from the pandemic as stalled projects get underway.

Multifamily construction

Apartment building may be booming, but multifamily construction lags behind other major metros. The busiest construction sites for those multifamily projects can be found in Texas and Arizona, both states popular with ex-Californians. The Dallas-Fort Worth metro led the nation in new construction for a fourth straight year, adding 21,000 apartments and landing the headquarters of Charles Schwab, the financial services giant formerly based in San Francisco.

Despite having a smaller population than the Bay Area, Phoenix will add a projected 16,000 units this year or 17% more than the combined total of the Bay Area. News of the area's demise may be premature, but with construction faster and cheaper in the Southwest, Texas and Arizona are proving increasingly attractive.

For example, total construction in Dallas-Fort Worth is currently 22% up on last year through the first 7 months of 2021, bringing in $16.7bn of work. Of that figure, residential construction accounts for $10.6bn.

Residential construction leads the way

In DFW, residential construction alone is up 31% with projects entering the planning stage in numbers not seen in recent years. Forward progress on the bipartisan Infrastructure Bill is also driving confidence in the construction sector.

Meanwhile in Austin, the first 3D printed homes in the US are currently on the market. The result of a partnership between ICON and Kansas City developer 3Strands, the lavacrete homes are constructed to be highly resistant to fire, flood and other natural disasters and were printed in less than a week.

It's this innovative approach that could yet see more ex-Californians settling in Texas and Arizona if the residential property crisis continues to bite.

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