Families with Children Dominate Single-Family Rental Demand, Single Renters on the Rise in Apartments
A closer examination of household composition and living arrangements reveal distinct patterns across rental asset classes.
Small Asset Properties More Family Oriented within the Multifamily Market
Rental product offerings are distinctly specialized. Small asset multifamily’s affordable profile has allowed the asset class to cater to families. However, deeper analysis uncovers its success in capturing single renter demand as well.
As shown below, single renters living alone and families with children comprised around 70% of all households in small asset properties. Single renters alone formed 45% of the total demand1.
This picture is flipped in single-family home rentals, where as expected, families with children formed the modal demand group — representing 45% of total households in this asset class.
The 2016 ACS snapshot for large asset multifamily is strikingly different, where single renters alone comprised nearly 60% of all households. Families with children registered at a market share of less than 15%.
Families without children present an interesting sub-segment, which as we examine in a later blog, is strongly associated with householder age. This group is equally represented in small and large apartment properties, where they account for 17% of households in both. In single-family rental homes, they make up a slightly higher share of 22%.
Distributional Shift Towards Single Renters and Families without Children
A distributional comparison of household type in 2016 and 2014 indicates some broader movements impacting the rental housing market.
As shown below, small asset properties display a noticeable shift away from families with children, whose shares went down by 121 basis points (bps) between 2014 and 2016. This is a similar trend across the rental market, which reflects the recent slight uptick in home ownership rates.
In comparison, small asset single renters and families without children show overall share gains close to 50 bps over this period. Apartment shares also increased their presence by 26 bps. These patterns are similar across the rental market to varying degrees.
Going forward, with the improving economy and wages, property operators need to keep a watchful eye on home ownership. This could have direct implications for unit mix and amenities catering to smaller and older households.
1 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.