Small and Large Multifamily Renter Income Growing the Fastest
- Small multifamily caters to a range of renters, playing a pivotal role as a more affordable rental housing option.
- Small multifamily households earned, on average, 23% less than those in single-family rentals and 18% less than in large multifamily.
- Income growth for small multifamily renters was slightly above the national average, while large multifamily households saw market-leading gains.
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.