Local apartment construction plummets
Hoodline's Nina Singh-Hudson reports that in the first six months of 2023, zero—zip, zilch, nada—new apartment construction projects were launched in the Silicon Valley. With interest rates soaring and apartment-building values slumping, should we be shocked that investors aren't too keen on commencing new local developments?
The once-thriving apartment construction in Silicon Valley and the Bay Area has ground to an abrupt halt, aggravating the existing housing crisis and dampening hopes of solving the region's housing crunch.
According to Mercury News, there were no new apartment projects that broke ground in Silicon Valley during the first half of 2023.
This starkly contrasts the last six months of 2022 when builders began construction on 5,298 multifamily units in the area.
Several factors contribute to this downturn, including higher interest rates, soaring material and labor costs, and decreased demand as residents flee from big cities.
Furthermore, the region's housing supply was already under strain in 2023, as noted by Hoodline, with San Jose experiencing the most significant decrease in home inventory in the United States, posing challenges for homebuyers and agents alike.
With the decline in new apartment constructions, the prospect of reaching the ambitious state-mandated goal of building over 441,000 market-rate and affordable homes in the next eight years is bleak.
Housing advocates argue that the chronic failure to create affordably priced apartments is causing detrimental effects in the region.
For example, low-income individuals and disadvantaged groups such as Black and brown people are disproportionately affected by rising rents and higher costs in general.
Experts predict that the decline in apartment construction will last till 2025, leading to potential significant rent increases if the demand for housing rebounds.
This article originally appeared in Hoodline. Read the whole thing here.
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