For the vast majority of market-rate renters, apartments remain affordable and these renters moving in are bringing big incomes, according to recent data from RealPage.
Demand for market-rate apartments in 2021 soared far above the highest levels on record in the three decades RealPage has tracked the market. Net demand totaled more than 673,000 units—obliterating the previous high set in 2000 by a remarkable 66%.
Demand would have been even stronger if not for record-low vacancy, severely limiting the number of units available to rent. Strong demand drove up apartment occupancy 2.1 basis points year-over-year to 97.5%. Both the increase and the resulting rate were the highest on record since RealPage began tracking apartments in the early 1990s.
‘Desperate Need’ for Affordable Housing Remains
“It’s tremendously encouraging to see that for the vast majority of market-rate renters, apartments remain affordable. With this big wave of new demand coming in, these renters are bringing big incomes and they are paying rent on time,” Jay Parsons, Vice President and Head of Economics at RealPage, said in prepared remarks. “We’ve seen this not only in our own data, but in reporting from all the publicly traded rental housing REITs. However, averages and medians do not tell the full story.”
Not every household could afford market-rate rentals even prior to the pandemic, “and as much as we need more housing of all types, our country remains in desperate need of more affordable housing,” he said. “One encouraging sign: Unlike in single-family, multifamily new supply continues to hit the market in large volumes—and even more is on the way.”
Nearly 360,000 market-rate apartment units completed in 2021. That’s the biggest addition in more than three decades. Another 682,000 units are under construction. Of those, roughly 426,000 are scheduled to complete in 2022—marking the first time since 1987 supply will top the 400,000-unit mark.
Parsons said that household formation is likely occurring at a faster clip than official government data sources are reporting.
“It’s not just apartments,” he said. “We’re seeing huge demand and ultra-low availability for all types of housing—including for-sale homes and single-family rentals—in essentially every city and at every price point.”
Provided by Paul Bergeron with GlobeSt.com