Small Asset Multifamily Grows Share of Non-Family Households
Smaller multifamily properties have grown their share of non-family households. On the other hand, large properties are appealing most to married couples. The share of renters living with roommates continues to rise across all apartment property types.
Living Arrangements Across Asset Types
Apartment living appeals to different groups of renters for various reasons. Factors such as proximity to work, affordability, amenities and lifestyle affect the decision-making process. How these attributes bundle together creates various types of living arrangements for a diverse base of U.S. renters.
By year-end 2017, close to two-thirds of adult renters lived in family households. Thirty-five percent were married-couple households and 29% were other family households, as shown below.¹
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For non-family households, 20% of renters lived alone and 16% shared accommodations.
At the same time, living arrangements vary across rental asset types. Apartments have significantly higher shares of renters living with non-family members.
As shown below, renters living alone made up a 27% share in small asset multifamily and a significantly higher share of 38% in large asset multifamily.
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Rental sharing rates were similarly higher in multifamily properties. Non-family households made up an 18% share in small apartment properties and 16% in large properties.
As expected, families formed the majority of demand for single-family rental properties, at a 76% share, with 44% being married-couple households.
Small Properties Grow Share of Non-Family Renters
Because of their relative affordability, small apartment buildings attract younger renters who are typically not living with family members. However, pockets of large asset multifamily oversupply have reduced rental premiums for downtown-located, highly amenitized properties in some of the nation’s top markets. However, these effects are likely temporary.
As shown below, between 2015 and 2017, the share of non-family households grew in small asset multifamily. Renters living alone and renters living with roommates increased their shares in small multifamily by 19 and 20 basis points (bps), respectively.
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On the other hand, large apartment buildings saw a 63 bps increase in non-family households. They also posted an 86 bps increase in renters living in married-couple households.
An oversupply of large multifamily from 2015 to 2017 created opportunities for many cost-conscious roommates and married-couple households to secure large building units at bargain prices. As the market settles and rent premiums adjust to traditional levels, small multifamily’s affordable profile will likely result in demand growth among younger renters and workforce renters.
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.