Report: Austin ranks second in country for multifamily housing permits

Austin is permitting more multifamily housing than virtually any other city in the United States, according to a recent report from RealPage, a global provider of software and data analytics to the real estate industry. With 9,157 units permitted, Austin is second on the company’s chart of top places for multifamily permits issued from the start of the year through September.

Houston is first on the list, with 10,127 permits issued during that period. Unincorporated areas in Houston’s Harris County and Mecklenberg County, near Charlotte, North Carolina, came in second and third, respectively. They’re followed, in descending order, by Washington, DC; Chicago, Illinois; Nashville-Davidson, Tennessee; Denver, Colorado; San Francisco, California; and San Antonio, Texas.

When it comes to what RealPage considers “market areas”—which generally encompass a larger area around a city, including its suburbs—the picture is substantially different. Austin still makes the top 10 on that list, but in seventh place, topped by market areas that include, in descending order: New York, Houston, Dallas, Seattle, Washington DC, and Los Angeles. Orlando, Florida, is ninth on the list, and Atlanta, Georgia, is 10th.

What’s the difference between a “place” and a “market area”?

To put RealPage’s report in context, it’s helpful to know that it uses the US Census’s definition of “places” in its report. “The Census defines places as incorporated cities or other geographies that tend to be smaller than counties,” according to an email from the company’s chief economist, Greg Willett. “Under the section of this blog that talks about permitting places, we’re referring to the city of Austin.”

The numbers for “market areas,” which are generally larger geographically than the cities they include, can look substantially different than those for the cities themselves. “Of the top permit-issuing places, Charlotte, Chicago, San Francisco, Denver, San Antonio and Nashville did not make the top 10 list for permits by metro,” reads the report. “Consistently placing in the top three for metro-level permitting, New York and Dallas had no permit issuing places in the top 10 as their apartment development pattern is spread out among suburbs.”

What does this mean for Austin?

The fact that Austin is higher on the “places” chart means a higher portion of its permits are for multifamily units to be built with in city limits rather than in suburbs—meaning more housing density in the city—than cities that placed higher on the “market” chart.

In the September data, Willett explains, “metro Austin is #7 for permitting on the metro level (which is how the info is typically consumed). The city of Austin is #2 for the ‘permitting-place’ level data. All that really means is that metro Austin’s building mainly occurs in the city of Austin, whereas building permits are issued in a variety of city/suburban/unincorporated area spots across metros like New York, Dallas, Seattle, and Los Angeles, all of which are busier spots for total building.”

Using U.S. Census figures, RealPage found that nationally multifamily permit levels fell in September after reaching a four-year high in August, “but remain up about 20.8% from a year ago.”

In Austin, however, “the annual permit volume has trended downward slightly for five months in a row,” writes Willett. “Thus, it’s probably safe to say we’ve moved past peak apartment starts for this cycle. Deliveries should begin to slow in another 12 to 18 months.”