Small and Large Multifamily Renter Income Growing the Fastest

Small Multifamily Accommodates Lower-Income Households

As highlighted in our recent blog, small multifamily properties (5-49 units) typically offer lower average rent levels and attract a broader range of renters. Renter income in small properties is also typically lower. Individuals in these properties tend to work across a range of occupations.

By year-end 2018, the average small multifamily household income was $51,100. This was only about 60% of the U.S. average household income level of $87,000.

In comparison, single-family rental (SFR) households had an average income of $62,700. Large multifamily (50+ units) household income averaged $62,500. On the other hand, duplex-quadruplex (2-4 units) renters had average incomes more in line with their small multifamily counterparts, at $49,700.

Small Multifamily Renter Income Growth Keeping Pace with National Average

While lower rents continue to reinforce small multifamily’s value, healthy renter income growth means there is potential for strong property-level cash flows.

Between 2016 and 2018, average household incomes in small apartment properties rose by 7.8%, slightly above the national average of 7.5%.

Large multifamily households, in comparison, saw significant gains of 10.5% between 2016 and 2018. Meanwhile, SFR and duplex-quadruplex households saw income gains below the national trend.

These developments provide insights into the demand characteristics within the ever-evolving U.S. rental market. Smaller properties continue to encompass the lion’s share of the country’s market-rate affordable housing stock. However, positive income trends point to an improvement in household finances, as well as amenity-creep continuing to permeate into smaller properties, attracting higher-earners.

In upcoming blogs, we will shed further light on the labor dynamics and outcomes of renters across property types.

For more multifamily research and insights, visit the Chatter blog.

Note: All data is sourced from the American Community Survey (ACS), unless otherwise stated. ACS statistics are sample-based estimates of the compositional profile of the total population in the given year of data collection, and include a margin of error. Small multifamily, based on the ACS data, is defined as structures with 5 to 49 units.