Providence Metro Ranks Among Worst for New Multi-Family Units - Despite Hundreds of Millions

Providence Metro Ranks Among Worst for New Multi-Family Units - Despite Hundreds of Millions

The Providence metro area has a major housing shortage and despite commitments of hundreds of millions of dollars by Rhode Island Governor Dan McKee and top lawmakers, the money is not getting to the root of the problem very quickly.

In 2023, the metro Providence area ranked second to last in the country of the top 50 metro areas in developing new multi-family units, according to data released this week by Apartment List based on the U.S. Census Bureau’s New Residential Survey.

So far, in 2024, the Providence metro area is seeing little improvement. The Providence metro area is defined as Rhode Island and southeastern Massachusetts -- a total population of 1.6 million.

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The data is apples to apples as it measures housing units per capita.

The study finds that when more units are built, rents stabilize.

Austin, Texas, leads the country in developing new units.

“Austin, TX serves as the prime example of the construction boom – the metro has led the way for multifamily permitting per-capita for seven years running. In 2023, 9.2 new multifamily units were permitted in the Austin metro for every 1,000 residents. For comparison, Austin’s pace of multifamily permitting last year was 61 percent higher than that of the second-ranked metro (Raleigh, NC) and 31 times greater than that of the metro with the slowest pace (Birmingham, AL). Austin is currently on pace to see a dramatic pullback in permitting in 2024 - but even with that pullback, Austin is still on pace to log the most new permits-per-capita this year,” according to the report.

While Austin permits 9.2 units per 1,000 residents, Providence permits just 0.4 per 1,000.

Nationally, the report finds that “the number of multifamily units under construction peaked in late 2023 at over a million, an all-time record. More recently, the number of units under construction has been gradually declining as the number of completions has begun to outpace the number of new units being issued. But even after the recent decline, the number of units still in the pipeline (919,000) remains higher than at any point in history before the recent peak. As we look ahead to next year and beyond, the permitting slowdown will eventually filter through to completions, but in the meantime, there remains a historic construction backlog still being worked through.”

In 2024, despite claims by the McKee administration that major progress has taken place, the data contradicts the claims.

The Providence-metro area is ranked the 10th worst. Providence metro area only improved to 0.7 per 1,000.

 

McKee Administration Defends Performance

While the data shows Rhode Island is making little progress in building a pipeline, the McKee Administration defends the ranking.

“Rhode Island has begun its efforts to reverse decades of housing-related underinvestment and inattention. Major allocations American Rescue Plan dollars have only occurred the last couple of years, and the reforms to outmoded and inefficient land use policy have either taken effect for the first time this year or are still under consideration in the General Assembly right now,” said Stefan Pryor, McKee’s Housing Secretary. 

“Once a housing development receives RI Housing financing, it often takes 2 to 3 years to come onto the market because of the market time required to obtain local approvals and permits, secure all needed private and public financing, and undertake the construction itself through to completion. Given that many of our strategic investments began less than a year ago, our pipeline is growing but not yet on the market,” added Pryor.

In December of 2021, Governor Dan McKee announced that Josh Saal had been appointed as the Deputy Secretary of Commerce for Housing to oversee the State’s housing efforts, including the "McKee-Matos Administration’s vision of creating more housing activity at all levels, especially affordable housing." 

At the time of the announcement, the Governor said, “The McKee Administration is committed to addressing Rhode Island’s housing challenges. The appointment of a strong, skilled Deputy Secretary of Commerce for Housing like Josh Saal is a sign of that commitment and a positive step forward.” Saal was forced to resign a year and a half later

Now, the McKee administration claims they are making improvements.

“The challenge of advancing housing production is a long-term and complex issue, and it will take time and effort at every level of government to change the trajectory. Across Rhode Island, the number of private building permits issued per year has declined from over 5,000 a year in the late 1980s to under 1,000 a year today. Again, we are in the early stages of reforming the system and injecting the capital, technical assistance, land use efficiencies, and leadership needed to reverse this nearly half-century-long trend. And we are making progress. In late May, RI Housing and we announced that investments made in the third consolidated funding round combined with previous investments of State Fiscal Recovery Funds are financing a total of over 2,600 homes, including over 2,000 homes that are affordable and over 250 middle-income homes,” said Pryor.