Estate and mortgageChanging Demographics Power Apartment Growth
With all the attention given to the nation"s rising ownership rate, apartments tend to get lost in the shuffle. But the number of units in buildings with at least five apartments also has grown, even as the number of renters had remained practically flat.
To a large extent, apartment growth is a product of the nation"s demographics. The number of young adults, who tend to make apartments their first stop out of the nest, has been growing since the late 1990s. In addition, more and more people of all ages are choosing to live alone, and rentals are ideal for one-person households.
But new construction also has been supported by high-income individuals and families, according to new research authored by economist Jack Goodman of Hartrey Advisors and produced by the National Multi-Housing Council, a trade group for apartment owners and developers.
"The number of apartment households with real incomes exceeding $50,000 has been increasing nearly 8 percent annually, well above the rate of growth in the larger, middle-income market," Goodman reports.
Just how big is the upscale apartment market?
The study, which is said to be the first ever statistical analysis of the sector, found that 25 percent of all renter-households earn $40,000 or more a year. And 25 percent pay at least $700 a month in rent.
But only 12 percent of all renters meet both those criteria. And just 3.6 percent pay $1,000 a month or more.
(Interestingly, nearly half of all apartments built during the last decade rented for $700 or more.)
Rather surprisingly, though, "upscalers," as Goodman calls them, are no older on average than other apartment residents. And they"re not disproportionately singles and childless couples, either.
While high-end renters are no more homogeneous than high-end home buyers or other renters, for that matter -- they can be classified into two groups those who choose apartment living for the duration, and those for whom their dwellings are temporary. And it"s here that residents exhibit their greatest differences, according to the economist.
Generally, half of all upscalers are "transitionals" who have been in their places for a year or less, and 30 percent are "lifestylers" who have been ensconced in their homes for at least four years. Transitionals are more likely to choose newer buildings, but lifestylers are older, more likely to reside in cities, and more often single women.
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