Maybe you’ve heard that some consider the US apartments market saturated: nothing could be further from the truth. Refuting the ‘saturation’ talk, reports say that the market will need nearly 5 million more units by 2030. And that’s not the only good news for the commercial real estate market; there are over 17 million units that will need renovation in the near future.
WASHINGTON DC–The US will need to build more than 4.6 million new apartment homes across a range of price points by 2030.
Interviewed in GlobeSt.com, NHMC (the National Multifamily Housing Council) Director of Research Caitlin Walter notes that the effects will be felt far beyond commercial real estate for years to come. According to information from NHMC, apartments and their 39 million residents contribute $1.3 trillion to the US economy and generates about 12.3 million jobs annually. Walter says this means that:
Apartments and their residents make a difference and help support the local economy…
So, the “gloom and doom” predictions due to vacancies and rising rents weren’t very accurate. Apartments have been being built at a rate of nearly 100,000 units fewer than required to meet demand—for the last five years in a row.
What Drives Demand?
There are three main reasons for growing apartment demand, according to experts: changing lifestyles, changing demographics, and immigration. Lifestyle changes include couples waiting longer to marry and begin a family (the time couples have traditionally started looking at home purchases). Fifty years ago, nearly half (44%) of US households were married couples, now the number is under 1-in-5. According to Norm Miller, principal at Hoyt Advisory Services and professor of Real Estate at the University of San Diego, that means “75 million people between 18 and 34 years old are entering the housing market, primarily as renters”.
Miller goes on to note that demographics are trending older, saying that many older Americans prefer to rent now. In some areas, Miller says that means nearly a third of all renters will be 55 and older. He goes on to say:
Increasingly, Baby Boomers and other empty nesters are trading single-family houses for the convenience of rental apartments. In fact, more than half of the net increase in renter households over the past decade came from the 45-plus demographic.
And with immigration accounting for more than 50% of population growth in some areas, this drives apartment demand too, as immigrants tend to prefer renting and will typically rent for longer periods.
There are, of course, regional differences in apartment demand. Some locales such as Raleigh, North Carolina are projected to grow in demand by as much as 70%. Locally in the Northwest, major metropolitan areas have a well-deserved reputation for tight supplies of apartments—along with sky high prices. And that’s not projected to change any time soon.
Keeping Track Of Everything For You
Multifamily and other commercial properties are our specialty at Pacwest Commercial Real Estate. Knowing every trend and what they mean to your investments is just part of what makes René Nelson and her team the local experts. Visit eugene-commercial.com or give René and her team a call at (541) 912-6583.