The Great Migration: Why Multifamily Developers Are Betting Big on Low-Density America
By Daniel Kaufman
Forget the skyscrapers—for the first time in a long time, the real action in multifamily construction is happening far from the urban core.
Developers are planting their flags in places most of us weren’t watching a few years ago: suburban fringes, micro counties, and even rural regions. The numbers aren’t subtle—they’re loud. According to the latest Q1 2025 Home Building Geography Index (HBGI) from the National Association of Home Builders (NAHB), multifamily construction in low-density areas is booming. Meanwhile, big cities—especially core counties in major metros—are seeing a pullback in new development.
This shift is not a blip. It’s a full-on structural rebalancing of where housing is being built—and it has major implications for how, and where, we deploy capital going forward.
📊 The Data Behind the Shift
Here’s what the numbers say:
Multifamily construction in low-density areas—including micro counties and outlying metro areas—jumped from 7.8% to 10% of the national share year-over-year.
Micro counties alone saw a 29.3% increase in multifamily permits.
Large metro outlying areas surged by 33.2%, reaching their highest level since mid-2022.
Meanwhile, large metro core counties lost 4.8 percentage points of market share. That’s a sharp decline considering they still lead in total volume.
This confirms what we’ve been hearing on the ground: builders are adjusting their models, moving away from high-cost urban cores and toward lower-density markets with more favorable economics.
📍 Why the Shift?
A few key drivers are behind the pivot:
Affordability Pressure
As mortgage rates remain elevated and urban land prices stay stubbornly high, builders are following the money—and the people. The outflow from major metros is real, and construction is chasing that migration.
Suburban Renter Demand
Point2Homes recently reported that renter growth is now outpacing urban growth in suburbs across five of the 20 largest U.S. metros. This isn’t just about cost—it’s also about lifestyle. People want space, flexibility, and access to quality schools and services without urban congestion.
Infrastructure & Land Availability
Lower-density areas offer less regulatory friction and more room to build. When every basis point matters, that can tilt the scale.
🏠 Single-Family Pullback
Interestingly, while multifamily is gaining steam in these markets, single-family construction is losing momentum almost across the board:
In large metro areas, single-family market share dropped from 9.4% to just 1.3%—an 8.1-point nosedive.
Small metro core counties saw the highest single-family growth, at just 3.2%.
Even non-metro/micro areas declined slightly, down 0.4%.
The takeaway? Even with population growth and migration, multifamily is winning the post-pandemic housing cycle in these markets.
🔎 Where to Focus Now
If you’re an investor or developer, here’s where to be looking:
Secondary and tertiary markets that are capturing outbound migration from expensive metros
Edge counties and commuter belts where land costs are low but demand is rising
Smaller metros with job growth, especially those benefiting from corporate relocations or infrastructure investment
Cities like Indianapolis, Raleigh, Boise, Greenville, and Des Moines are all emerging as hotbeds for multifamily activity. Watch for areas with low vacancy, modest rent growth, and local governments that want new housing.
💬 Final Thoughts
The old map of multifamily development is being redrawn in real time—and if you’re still only looking at gateway cities and urban core neighborhoods, you’re missing the story.
This is a moment for forward-thinking developers to rethink land strategy, recalibrate underwriting, and find value where others haven’t looked yet.
I’ll be diving deeper into specific markets, underwriting strategies, and case studies in upcoming posts. Subscribe and come back next week—we’re just getting started.
👉 www.danielkaufmanre.com | Grounded insights. Real returns.
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