There’s at least one thing young and old can seem to agree on: in today’s housing market, renting is the way to go.
They may not like each other’s music or fashion, but there’s at least one thing the young and the old can seem to agree on: in today’s housing market, renting is the way to go.
You’ve probably heard about the millennial generation’s tendency to rent. It’s not as well-known that Gen Xers and Baby Boomers are also choosing to rent at a higher rate today than they did a decade ago. According to Pew Research, the proportion of 35 to 44-year-olds who rent increased from 31% in 2006 to 41% in 2016. Meanwhile the rental rates among 45 to 64-year-olds increased from 22% to 28% over the same period.
Retirees, too, are renting more than in the past — with Americans in their 60s, 70s and 80s deciding that becoming renters makes more sense for them today than a decade ago. In fact, reports estimate that fully a third of current urban applications are for renters over the age of 60. And that trend is expected to accelerate. According to the not-for-profit Population Reference Bureau, the number of Americans 65 or older is projected to double by 2060, when they are expected to make up nearly a quarter of the population (compared to 15% today).
So whether you attribute it to the expensive housing market or to shifting values toward a culture that’s less interested in personal property, the bottom line is more Americans are renting today than ever before. Of total households in the country, 43% rented in 2016, compared to 35% a decade earlier. That increase, in conjunction with data from a Rent.com survey suggesting that at least 80% of millennial renters don’t plan to trade in their apartments for homes anytime soon, suggests a healthy rental market for the foreseeable future.
Look out: you might be competing with
mom and dad for your next apartment
That’s good news for apartment owners, operators and builders, but it also presents a challenge. For example, the shift in renter demographics toward a diversity of resident ages means that multifamily communities intending to attract older renters will have to adjust their building designs and operations to cater to the needs of residents in all age brackets.
As a recent National Multifamily Housing Council (NMHC) report notes, boomers are likely to need larger units than the 25 to 34-year-old demographic apartment developers have traditionally built for. Many are also downsizing from homes and will need creative solutions to store their possessions. With these factors at play, multifamily operators and developers who want their communities to compete for these residents should creatively reconcile the need for “downsized” living space with enough storage for a potential lifetime of possessions — plus room for entertaining and socializing when friends, family and grandchildren come to visit.
The surge of mixed-use and multifamily development around teaching hospitals and health clinics reflects the desire of many boomers to live near doctors and medical facilities as they age. So striking the right product balance for boomers involves sizing units appropriately, incorporating sufficient storage solutions and providing convenience to getting medical care.
"The 73 million baby boomers in the United States accounted for 58.6 percent of the net increase in renter households between 2006 and 2016"
Source: NMHC. "Disruption: How Demographics, Psychographics And Technology Are Bringing Multifamily To The Brink Of A Design Revolution." January 2018.
Immigration will reshape America’s
demographics — and housing needs
Multifamily developers planning for future demand should also consider the US’s declining birthrate, which hit a historic low of 62 births per 1000 women last year. The NMHC report found that immigration will likely overtake domestic births as the primary source of population replenishment by 2024. According to the report, “Hispanic households alone are expected to account for 55% of population growth”. Multifamily owners should take note, because immigrant-headed households are far more likely to rent (49%) than those headed by US-born residents (33%) and also more likely to rent longer. That means that in the next few decades, the renter population will increasingly consist of immigrants.
Savvy apartment owners can make decisions now that will make their communities more attractive to immigrants today and in the future. From tabulating government data, NMHC estimates that “53% of all immigrant households from the Middle Americas region have four or more people”. And Pew finds the percentage of immigrant families with at least three members is far greater than that of native-born residents. To meet the burgeoning demand successfully, rental housing will need to accomodate larger families and multigenerational households while remaining affordable.
"Larger apartment units will observe the most demand pressures from this demographic trend, with lower-than-average income, rental unit affordability stress suggests that low-amenity larger units will be in very high demand for some time."
Source: NMHC. "Disruption: How Demographics, Psychographics And Technology Are Bringing Multifamily To The Brink Of A Design Revolution." January 2018.
If you want your communities to compete for this important contingent of renters, you should consider converting one and two-bedroom apartments into three and four-bedrooms, with plenty of closets, built-ins, and extra-tall kitchen cabinets to maximize the square footage. Similarly, outfitting the apartment with more kid-friendly and spill- and damage-friendly materials will save time and money for both you and your renters. Well-kept public spaces, pools, game rooms, barbecues, and other outdoor amenities will provide recreational outlets and keep these younger families entertained. And don’t forget to include multilingual signage at your properties — both to make your communities welcoming, and also to communicate your policies.
If your communities don’t typically include pools or big public spaces, or your units share amenities, like laundry rooms, you’ll have an edge in keeping your rents attractively affordable — one of the most widespread concerns of our current renting climate. As NMHC notes, with “lower-than average income” reflected in the demographic shifts we’re witnessing, “low-amenity larger units will be in very high demand for some time.”
Keep your community responsive
with flexible designs and materials
The nature of housing demand is always changing. To truly future-proof a multifamily community, owners should embrace modularity and flexibility. Making use of modern design principles and construction materials, such as interior movable walls, allows your units to respond to changes in demographics and demand in less than the time it takes to repaint an apartment, while still offering a safe, comfortable space to the current resident.
"For an industry whose bread and butter has long been a single person looking for a one-bedroom apartment, this wellspring of future demand will challenge the traditional economics, planning and design. Working around those well-entrenched assumptions will require new approaches and innovation."
Source: NMHC. "Disruption: How Demographics, Psychographics And Technology Are Bringing Multifamily To The Brink Of A Design Revolution." January 2018.
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