Is Huntsville Building Too Many Apartments?
Huntsville, Alabama, is building so many apartments that Scott Turner of AL.com is renaming the Rocket City to the ‘Apartment City’. The number of new apartment units has increased by 65% in the last year, yet the city has only grown by 5.8%.
Huntsville Needed More Apartments
Huntsville did need an apartment upgrade with all the new jobs coming to the area such as Mazda-Toyota, Blue Origin, and FBI, but did we really need this many apartments? Not only did we have a record year with new apartments and a 65% increase in units over the past year. We also have a lot more units coming available as well. We have 44 apartment complexes with 8,800 units under construction and another 34 apartment complexes with 6,900 units that have already been approved by our commission.
Huntsville Needs More Single-Family Homes
With all these dollars chasing apartment complexes, you might be wondering, are we doing anything about single-family homes and affecting the lack of supply that we have in this area? Tommy Battle said, “Yes, single-family housing is something that we're going to have to push a little bit coming up.” We had 1,021 single-family homes last year and 2022, but 4,905 in multi-family.
The good news is that we have had 676 single-family lots approved for this next year. However, that's simply not enough compared to the inventory of apartments that we have. With all of these apartment complexes online and in the works as well as interest rates doubling from the highs 2’s and 3’s up to the 6’s and above for commercial projects like this, you have to wonder if these investments at these apartment complexes still pencil out for these investors. Especially if there's an oversupply and the vacancy rates are higher than normal for this area.
How Will Too Many Apartments Affect Huntsville?
That's going to be something to watch. How is that going to affect rental rates in our marketplace and will some of these apartment complexes end up in foreclosure as well? I think the bet for the city with all these apartments coming online is that we're likely going to have an even more transient workforce with Mazda-Toyota, the FBI, and other large employers coming in and bringing a lot of jobs to the area.
The question that I have is, is this good for Huntsville? Typically when you live in an apartment, you don't have quite the pride of ownership in the community that you otherwise would. Also, the wealth transfer just does not happen. The average renter in this country has about a $5,500 net worth versus over $255,000 for a homeowner.
These are two red flags that I have with the strategy of building so many apartments. If you don't want to be part of ‘Renter Nation’ or ‘Apartment City’ and you want to build your wealth, send us an email at firstname.lastname@example.org or contact us here and we'll help you find your new home.
Posted by Matt Curtis on