Huntsville’s apartment craze: Are multi-family rental developments taking over the city?

Over the past few years, a variety of changes have happened in North Alabama that have altered the landscape of the Rocket City. Once a rather quiet, smaller southern city, Huntsville has experienced an explosive influx of people.

The catalyst for such population demographics in Huntsville, which surpassed the population of Birmingham back in 2021, depends upon a variety of factors: the growth in tech-sector and engineering jobs, the extreme affordability of the city (especially in the case for family growth), and an award-winning high quality of life, to name a few. 

This rapidly changed the dynamics of the city, especially in the case of housing and the Real Estate market, which expanded between 2021-2023. The cost of homes, and the number of home sales, increased to accommodate such a dramatic increase in population numbers. Alongside Real Estate sales came the development of new rental properties and, most notably, apartment buildings.

These new apartments have not often not translated well to long-time residents of the city. A quick peruse through social media or interviews online with news channels reveals many a disgruntled Huntsville citizen left with one question: Why are there so many darn apartments showing up all over the city? 

A short drive through any part of Huntsville serves as a reminder of the city’s economic success; the buzz of new construction, especially of apartments, raises questions of whether all the new units will fill quickly and if single-family housing is falling out of favor. Many people are wondering if all these new apartments are necessary at all. 

However, are useless apartments really taking over the city as fast as many Huntsvillians claim them to be?

At a cursory glance, Huntsville’s multi-family developments appear to be more prominent than new single-family housing. In reality, according to Manager of Long-Range & Urban Planning Dennis Madsen, this might not necessarily be the case.

Madsen explained, ironically, that 2023 isn’t even a record year for apartment construction.

“They’re simply becoming more noticeable because single-family construction is more spread out through the city,” said Madsen. 

Consistent housing growth is present across the board, both in terms of housing types and locations within the city. Madsen noted that even though this development looks unusually fast, Huntsville’s growth is consistent with trends of over a decade. Madsen also said he does not anticipate population growth resulting from growing housing options will cause the city problems beyond typical growing pains.

“We’ve done a pretty decent job staying on pace with a lot of that development, and a lot of times development will see new infrastructure coming in and development will follow that infrastructure or come in on the heels of that infrastructure. So, the fact that we’ve been making those investments really, pretty much in every direction around the city is the reason that you see development occurring in almost every direction around the city,” Madsen said.

For the next several years, Madsen said, Huntsville will likely see the peak of multifamily construction, but he also explained the difficulty of predicting that with any certainty as multi-family development is also influenced by national need, rather than just local, making it far more volatile than single-family housing.

“We have been producing single-family housing on a fairly steady basis for the last couple of decades, right: usually around 1000 units or more a year of single-family housing. Whereas with multifamily, in the past couple of decades, we’ve had years where no units were put on the ground. And then in the last couple of years, you’ve had over 1,000 units put on the ground. So, multifamily does bounce up and down a lot more than single family,” Madsen said.

Further, building permits are often registered to projects that may take several months or years to begin construction as private developers keep watch of absorbency rates to determine the best time to build. In some cases, rather than take the projects on, developers will choose to simply sell the property. Madsen explained that that period of waiting does not indicate disinterest in development in Huntsville, but issues of timing on the developers’ ends. 

Shane Davis, Director of Urban and Economic Development, echoed these sentiments. Davis pointed out that Huntsville’s 2022-2023 apartment growth was only the fourth largest increase in rental units over the past four decades, with the 1980s and 1990s ringing in the top two decades. Davis also pointed out that, even though Huntsville has seen an increase in 10,000 multi-family units over the past four years, around 80-85% of these units are currently occupied. 

“What this number means is that not only are these new apartments filling an important housing gap, they are indeed necessary for the growth of the city. For anyone asking about the number of units and apartment buildings, the answer is simple: the housing and rental market is responding to the basic principle of Supply and Demand,” said Davis.

Another major point that both Madsen and Davis leaned on was the visibility of the new apartments.

“The reason that so many people think that there are more apartments is because they are more visible. Style matters here, and makes a huge difference. Older apartments in Huntsville were built out, not up. Apartments today are built higher, and are more visible on the skyline,” argued Davis. 

And, according to both representatives, this trend will most likely continue.