Immigration and the Small Property Rental Market
Immigration plays an important role in shoring up household formation rates and housing demand in the United States. Here’s a first look at the significance of immigration on the small property rental market.
What is the Share of Immigrant Households in Small Buildings?
Immigrant households, which for the purpose of this post are identified as those with foreign-born heads of household, have played a crucial role in driving housing demand in the United States.
Significantly, immigration has a greater impact on the multifamily rental market — including small and large properties — than the overall housing inventory, which includes owned homes.
Consider that nearly a quarter of all households in 2014 across both small rental properties (5 to 49 units) and large rental properties (50+ units) were immigrants, compared to only about 15 percent for the overall housing inventory.
Growth Trajectory – Immigrant Renters
However, a closer examination of the multifamily rental universe also reveals that immigrant households within small asset buildings grew faster compared to those living in large asset buildings.
As shown above, immigrant households in small properties with heads between 35 and 64 years experienced growth of nearly 4 percent annually between 2010 and 2014, compared with 2 percent for large buildings.
Immigrant household growth in small properties remained strong even with older heads, whereas it tapered off to just over 1 percent in large buildings.
Fewer hiring opportunities for younger immigrants and immigrant demographics may explain in part the negative growth rate in small properties for the 18 to 34 year old cohort.