Inventory shortages are severely impacting the housing market, and will have the greatest effect upon renters. A recent multi-family report estimates that by 2030, 4 million new apartments will be needed to keep up with the demand. The National Apartment Association (NAA) along with the National Multifamily Housing council (NMHC) have suggested that in order to meet the demand, 325,000 new apartments (those in buildings with five or more rental units) need to be built each year. That may be a difficult number to achieve, since just 244,000 apartments were built between 2012 and 2016.
The main drivers behind this need are delays in affordable home-buying and the influx of new renter households as a result of an aging population and immigration. On average, there were one million new renter households formed each year since 2012.
Suzanne DeVita explored the results of this report in RISMedia (Research: Rental Demand to Escalate by the Millions). According to Dr. Norm Miller, who collaborated on the study with NAA and NMHC, “renting is not just for younger generations anymore.” Empty nesters and baby boomers are equally important when it comes to demand for rental units. In fact, says Dr. Miller says, “More than half of the net increases in renter households over the past decade have come from the 45-plus demographic.”
Additionally, immigrant households will also have a greater effect on renter and owner occupied housing markets. The widespread demand will be felt mainly in the South and West, including Arizona, Georgia and Nevada. In the East, the markets include New York and Virginia.
Cindy Clare, chair of the National Apartment Association, believes that “the western U.S. as well as states such as Texas, Florida and North Carolina are expected to have the greatest need for new apartment housing through 20130, although all states will need more apartment housing moving forward. The need is for all types of apartments at all price points.”
The National Low Income Housing Coalition also issued a recent report. They are concerned that there will be an “inability for renters in every state, earning a minimum wage and working 40 hours each week, to afford a two-bedroom rental.” This may portend a shortage of 7.4 million affordable units for lower income families.
A previously cited study by the renowned Joint Center for Housing Studies at Harvard University affirms the need, with approximately 6 million, older, low income renter households, who will be burdened, as well.
Bob DeWitt, chair of the National Multifamily Housing Council, said, “Apartments and their 39 million residents contribute $1.3 trillion to the national economy. The growing demand for apartments…will make a significant and positive impact on our nation’s economy for years to come.”