Apartment Living: It’s Not Just For Millennials
The apartment market is firing on all cylinders—or to be more precise, it is firing across all four areas of the National Multifamily Housing Council’s Quarterly Survey of Apartment Market Conditions. For the third quarter in a row the four areas the index measures—market tightness, sales volume, equity financing and debt financing–all rose over the previous quarter with scores of 52, 58, 54 and 71, respectively.
“Demand for apartment residences is still strong enough to offset the gradually rising level of new apartment deliveries,” Mark Obrinsky, NMHC’s SVP of Research and Chief Economist told GlobeSt.com. “Even with occupancy rates at high levels, markets got just a bit tighter in the last three months.”
The survey also delved into the demographics behind and uncovered some unexpected shifts. Besides the core demand for apartment space from the mid-to-late twenties demographic group, the survey also found that one in five, or 22%, of the respondents reported a significant increase in the number of Baby Boomers among their residents. A similar share of 21% indicated a significant increase in “forty-somethings” in their properties.
A smaller but still significant share of respondents reported increases among single parents (13%) and married couples with children (4%).
“Young people still make up a disproportionate share of apartment renters,” said Obrinsky. “But now we’re starting to see growing segment of baby boomers attracted to apartment living.”
Other studies have come to similar conclusions. Earlier this year RealtyTrac identified what it felt were the top 25 rental markets for Baby Boomers.
Annual gross rental yields for the top 25 baby boomer rental markets ranged from 5.5% in Placer County, Calif., in the Sacramento metro area up to 20.93% in Pasco County, Fla., in the Tampa Bay-St. Petersburg metro area.
Other top metro areas were Lake Havasu City-Kingman, Ariz., Wilmington, N.C., Daphne-Fairhope-Foley, Ala., Prescott, Ariz., Asheville, N.C., Seaford, Del., Bend, Ore., and Hilton Head, S.C.
“Investors leveraging demographic trends will often be able to amplify rental returns and home price appreciation, particularly when it comes to trends in the baby boomer and millennial generations, which combined account for approximately 147 million people — more than 60 percent of the US adult population,” said Daren Blomquist, vice president at RealtyTrac, in a prepared statement.
“Many individuals in both of those demographic groups are in the midst of major life changes that will often involve changes in housing, something that smart real estate investors should take into consideration when deciding when and where to buy or sell.”