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NOVEMBER 2022

Multifamily construction projects primarily come in three categories: New Construction, Renovation Only (renovation), 

and Additions Only (additions), where additional units are added to an existing property. As expected, new construction is 

the largest category by far, with renovation representing less than a third of all construction projects annually. In 2021, 

renovation represented about 24 percent of all construction projects, totaling just under $3 billion. (Most of the data 

discussed in this report does not include federally assisted projects, except as noted.)

Renovation Projects Tend to Be Recession-Proof 

According to Dodge Data & Analytics’ Supply Track construction pipeline data, which distinguishes between multifamily 

apartment and condominium construction, prior to the end of the Great Recession in 2009, the number of multifamily 

renovation projects averaged just under 350 per year, as shown in the left-hand chart below. This represented just 

under 15 percent of all multifamily construction projects annually, as shown in the right-hand chart below. 

Interestingly, while banks pulled back from construction lending during the Great Recession, which affected new 

projects after 2010, the pullback did not appear to affect funding for renovation projects. This is most likely because 

renovating an existing property tends to be less risky than building a new property from the ground up. In fact, 

renovation projects almost doubled over the five-year period ending in 2014, averaging just under 650 projects per year 

and jumping to just under a third of all construction projects. 

As the economy returned closer to pre-Great Recession job levels after 2014, spurring demand for all types of housing 

including rental apartments, new multifamily construction rebounded. However, renovation projects also increased, 

averaging about 1,200 projects annually or about one-quarter of all multifamily construction projects. 

Multifamily Renovations a Small but Stable Part of Construction Activity

Number of Projects by Construction Type by Completion Year

 -

 1,000

 2,000

 3,000

 4,000

 5,000

 6,000

Number of Projects

New Construction Additions Renovations Only

NOTE: Supply Track data is not an actual forecast of activity, it is a monitor of activity reported on to-date. As more projects are planned and tracked, figures 

in future periods might go up. 

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Number of Projects

New Construction Additions Renovations Only

Share of Projects by Construction Type by Completion Year

Source: Dodge Data & Analytics Supply Track, August 20, 2022, based on multifamily apartment construction projects valued at $500,000 or higher. 

Excludes federally-assisted renovation projects such as those associated with federal Low Income Housing Tax Credits (LIHTC) 
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Statistic Estimated 

Number/Share

Total Completed Multifamily Construction Projects 66,000

Number of Conventional Renovation Only Projects 14,100

Renovation Only Project Share of Total 21%

Weighted Average Units in Renovation Only Projects 75

Estimated Units for All Renovation Projects 1,060,000

Total Estimated Completed Units All Construction 6,020,000

Estimated Renovation Only Unit Share of Total 18%

Summary of Completed Renovation Only Results Past 20 Years 

More than One Million Units Renovated in Past Two Decades

As shown in the table below, over the past 20 years, an estimated 14,100 multifamily apartment renovation 

projects have been completed, representing approximately 21 percent of all completed multifamily apartment 

construction projects, according to Dodge Data & Analytics. On average, the projects contained an estimated 75 

units, suggesting that an estimated 1.1 million apartment units have undergone renovation over the past 20 

years, with about 55,000 apartment units undergoing some sort of renovation each year. This represents about 

18 percent of the total estimated 6 million apartment units, including federally assisted units, in properties that 

underwent construction over the past 20 years. 

Source: Fannie Mae analytics based on Dodge Data & Analytics Supply Track data as of August 20, 2022. Based on multifamily apartment 

construction projects valued at $500,000 or higher from January 1, 2002 – December 31, 2021. Total includes federally-assisted projects 

such as LIHTC projects.

Note: Unit information available for a subset of conventional renovation only projects annually. Total units based on sum of total projects 

per year multiplied by the average number of units per renovation only project where unit information is available. 

Renovations Undertaken for Several Reasons

Renovations at multifamily properties are frequently undertaken to maintain both a property’s condition and 

appeal. These renovations may include facade improvement, as well as more minor projects, such as updating 

kitchen cabinets or bathroom fixtures. These maintenance renovations tend to be more modest in scope. Simply 

painting or recarpeting is not generally substantial enough to be considered a renovation. 

Renovation may also be part of an investment strategy. Value-Add investing involves purchasing an 

underperforming multifamily asset at a discount, implementing significant renovations, and then raising rents. 

Value-Add investing tends to be more substantial and may include things like changing a unit’s layout to create an 

open floor plan for instance or redoing a kitchen or bathroom entirely, in addition to the renovations noted above. 

Most data vendors do not track the reason for a renovation project generally. Often, the data is gathered from 

sources that do not provide such granular information, especially since renovations tend to have a short duration. 

However, renovations do vary greatly in construction dollar values, giving a hint as to the extent of the type of 

renovation that took place.

Multifamily Economic and Market Commentary
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A Significant Share of Renovations Under $1 Million 

As shown in the left-hand chart below, a significant number of multifamily renovations have a construction 

value of under $1 million. The share of renovations valued under $1 million averaged about 38 percent of such 

projects in the run-up to the Great Recession, which started in December 2007. Given the relatively low value of 

these projects, it’s possible that these reflect maintenance renovations to maintain property condition and 

appeal.

From the start of the Great Recession through approximately 2013, however, the number of renovations under 

$1 million rose slightly to about half of all renovation projects annually. This uptick likely reflects the 

willingness of lenders to finance smaller, less risky projects during a period of economic uncertainty. It also 

reflects the importance placed on maintenance renovation projects to keep up a property’s value as the share 

of such projects remained stable during this period. 

Share of Smaller Projects Remained Consistent Until 2014

However, what may be most interesting is that the share of projects estimated at under $1 million has remained 

relatively stable. Since the start of 2014, the share of renovations has averaged about 45 percent of all projects, 

higher than the pre-Great Recession share. This is surprising as rising construction costs coupled with inflation 

suggest that the share of smaller renovation projects should have declined. And yet, as shown on the righthand chart below, the number of renovations increased by about 300 projects to nearly 1,000 projects starting 

in 2014 and has remained at this number or higher annually since. 

Number of Projects by Project Value by 

Completion Year

 -

 200

 400

 600

 800

 1,000

 1,200

 1,400

 1,600

Number of Projects

<$1M

>=$1 and $5M

>$5M

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100% Number of Projects

<$1M >=$1 and $5M >$5M

Share of Projects by Project Value by 

Completion Year

Source: Source: Dodge Data & Analytics Supply Track, August 20, 2022, based on multifamily apartment construction projects valued at $500,000 

or higher. Excludes federally-assisted renovation projects such as those associated with LIHTC.

NOTE: Supply Track data is not an actual forecast of activity, it is a monitor of activity reported on to-date. As more projects are planned and tracked, 

figures in future periods might go up. 

Multifamily Economic and Market Commentary
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Multifamily Economic and Market Commentary

Construction Project Value Number Share Average Number 

of Units

Estimated 

Units

Under $1M 6,450 46% 55 360,000

$1M but less than $5M 6,000 42% 75 450,000

$5M and up 1,650 12% 140 230,000

Total 14,100 100% 75 1,060,000

Mid-Range Renovation Projects On the Rise

Renovations valued under $1 million saw the largest percentage increase in 2014, jumping over 60 percent 

to 515 projects, while renovations in the $1 million to $5 million range increased by 33 percent to about 370 

projects. 

However, from 2013 to 2020, renovations above $1 million more than doubled to an estimated 800 projects 

compared to just an estimated 75 percent increase for projects valued at under $1 million, or about 560 

projects annually. 

While a component of this increase is attributable to higher construction costs, increased investor appetite 

for multifamily due to rising demand for apartments likely also played a role. With rising construction costs 

making it more costly to build new apartment properties from the ground up, some investors likely found it 

easier to purchase existing properties and renovate them. 

Most Renovation Projects Have a Construction Value Over $1 Million

As shown in the table below, over the past 20 years, an estimated 14,100 multifamily renovations have been 

completed, impacting an estimated 1.1 million apartments. About 6,450 projects containing an estimated 

360,000 units were for renovations valued under $1 million, consistent with the annual data on the 

previous page. Another 6,000 projects containing an estimated 450,000 units were for renovations costing 

at least $1 million but less than $5 million. Just 1,650 projects containing an estimated 230,000 units were 

in renovations costing $5 million or higher. 

Still, over the past 20 years, the majority of renovations were valued at more than $1 million. These totaled 

7,650 over the past 20 years and contained an estimated 680,000 units, averaging just under 35,000 units 

per year.

Source: Source: Dodge Data & Analytics Supply Track, August 20, 2022, based on multifamily apartment construction projects valued at 

$500,000 or higher from January 1, 2002 – December 31, 2021. Excludes federally-assisted projects such as LIHTC projects.

Note: Unit information available for a subset of conventional renovation only projects annually. Estimated units based total projects 

for each construction project value category multiplied by the average number of units per renovation only project where unit

information is available, rounded up.

Summary of Completed Multifamily Renovations Over Past 20 Years by Construction Project Value 
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Multifamily Economic and Market Commentary

Most Renovations Occur in Larger Metros

Most multifamily renovations have occurred in older and larger metros, which tend to have many barriers to entry for 

new multifamily construction projects. With over 5,000 renovations since 2010 after the end of the Great Recession, 

the New York Metro area, which includes parts of New Jersey and Pennsylvania, is the clear leader in renovations. This 

is consistent with the metro area’s status of having the nation’s largest renter population, as well as being one of the 

most densely-populated. 

Excluding the large New York metro area, many of the metro areas with the largest number of multifamily renovations 

over the past decade can also be found in some of the nation’s oldest and largest metro areas, as shown below. The 

top five renovation metros since 2010 are Boston, San Francisco, Washington, D.C., Philadelphia, and Chicago. 

Interestingly, the Miami and Houston metro areas are also among the nation’s top 10 metro areas for renovations. 

This is most likely due to the renovations necessary after several hurricanes. For instance, Houston saw a jump in 

renovations in 2017 and 2018 after Hurricane Harvey, while Miami saw a jump after Hurricane Irma in 2017. 

Number of Completed Multifamily Renovation Projects Since 2010 by Metro Area* 

Source: Source: Dodge Data & Analytics Supply Track, August 20, 2022, based on multifamily apartment construction projects valued at 

$500,000 or higher from January 1, 2002 – December 31, 2021. Excludes federally-assisted projects such as LIHTC projects.

*Excludes the New York Metro Area with 5,300 projects since the start of 2010 to remove distortion from map.
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Multifamily Economic and Market Commentary

Cost of Renovations Trended Downward in 2021

Since 2010, the cost of multifamily renovations has grown, averaging a total of $2.4 billion annually. In 2020, the cost 

soared to $3.6 billion – about four times the value recorded in 2010– before trending downward in 2021 to $2.8 billion. 

Undoubtedly, rising construction costs coupled with labor shortages and supply chain disruptions likely contributed 

to the substantial increase, which since then appears to be moderating. 

However, even taking into account the cost of rising materials, in real terms, the cost of multifamily renovations has 

increased steadily since 2010 and soared to an estimated $2.7 billion in 2020 before declining to $2.0 billion in 2021.

Total Construction Value of Completed Multifamily Renovation Projects Since 2002 Nominal and Real Value 

Source: Source: Dodge Data & Analytics Supply Track, August 20, 2022, based on multifamily apartment construction projects valued at 

$500,000 or higher from January 1, 2002 – December 31, 2021. Excludes federally-assisted projects such as LIHTC projects.

Real Value Index Source: U.S. Bureau of Labor Statistics (BLS): Producer Price Index (PPI) [Series ID = WPSFD431] - Final demand -

Construction for private capital investment

Renovation Projects Staying Consistent

New multifamily properties built from the ground up have become more expensive over the past few years due to 

the increased cost of construction materials and the shortage of trained construction workers. In addition, the 

average new multifamily property can take between 18 and 36 months, if not longer, to complete. By contrast, 

many renovation projects are generally turned around in less than a year and require fewer workers and materials. 

Hence, they tend to be considered less risky for property owners and lenders alike. As a result, the level of 

renovation projects is much more stable from year to year than new construction. 

Indeed, the share of renovations since 2015 has averaged about a quarter of all multifamily construction projects, 

higher than the 15 percent share prior to the Great Recession, and has provided a steady supply of updated 

apartments for renters over the past several years.

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0

Construction Project Value 

($Billions)

Nominal Value Real Value (2010$)
Multifamily Economic and Market Commentary

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Tanya Zahalak

Economist Advisor

Multifamily Economics and Strategic Research

November 14, 2022

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Research (ESR) Group included in these materials should not be construed as indicating Fannie Mae’s 

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