Need for Apartments
Research: U.S. needs 4.6M new apartments by 2030
WASHINGTON – July 7, 2017 – Delayed marriages, an aging population and international immigration are increasing the pressure for new apartments – 4.6 million by 2030 – according to a study commissioned by the National Multifamily Housing Council (NMHC) and the National Apartment Association (NAA).
The study conducted by Hoyt Advisory Services notes that:
- Currently, nearly 39 million people live in apartments
- In the past five years, an average of 1 million new renter households formed every year – a record amount
- It will take building an average of at least 325,000 new apartment homes every year to meet demand, but, on average, just 244,000 apartments were delivered from 2012 through 2016
For purposes of the study, apartments were defined as rental apartments in buildings with five or more units. The data is available on WeAreApartments.org.
Increased demand for apartments is due in large part to:
- Delayed house purchases. Life events such as marriage and children are the biggest drivers of homeownership. In 1960, 44 percent of all households in the U.S. were married couples with children. Today, it’s less than one in five (19 percent), and this trend is expected to continue.
- An aging population. People ages 65-plus will account for a large part of population growth going forward across all states. The research shows older renters are helping to drive future apartment demand, particularly in the northeast, where renters ages 55-plus will account for more than 30 percent of rental households.
- International immigration is assumed to account for approximately half (51 percent) of all new population growth in the U.S., with higher growth expected in the nation’s border states. Immigrants have a higher propensity to rent and typically rent for longer periods of time.
“We’re experiencing fundamental shifts in our housing dynamics, as more people are moving away from buying houses and choosing apartments instead. More than 75 million people between 18 and 34 years old are entering the housing market, primarily as renters,” says Dr. Norm Miller, Principle at Hoyt Advisory Services and Professor of Real Estate at the University of San Diego.
“But renting is not just for the younger generations anymore. 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.”
There will also be a growing need for renovations and improvements on existing apartment buildings, which will provide a boost in jobs (and the economy) nationwide. Hoyt’s research found that 51 percent of the apartment stock was built before 1980, which translates into 11.7 million units that could need upgrading by 2030. The older stock is highly concentrated in the Northeast.
In addition, the study identified Florida – along with California, Georgia, Arizona, North Carolina, Nevada, New York, Texas, Virginia and Washington – as one of the core markets where “hundreds of thousands of new rental units will be needed by 2030.”