Here’s a quick look at how demographics are contributing to a surge in renting single-family homes.

Household income data underscores the importance of small apartment buildings in maintaining workforce housing options, and thereby, the economic dynamism of cities.

Apartment properties show rent increases across all metro segments; while growing steadily in the largest metros, secondary markets are now experiencing higher rent growth in the small asset space.

As primary markets get increasingly expensive for housing, young adults at the beginning of their careers are moving into regional hubs. This movement is providing new growth opportunities for small asset investments.

With a lower share of inventory located in flood-prone areas, small buildings are more conservative in their risk profile and offer value for investment across the apartment market. Resiliency and Risk Landscape for Small Buildings Recent reports point to a counter-intuitive trend of how home prices and apartment rents are growing faster in flood prone areas. This trend is explained by the premium associated with scenic locations such as beach fronts and waterways, since they are also the most-prone to flooding. This varies across metro areas and asset class. As shown below, based on data obtained from the American Housing Survey (AHS) 2015, around 8% of all small apartment building units in the United States were located within areas assessed with a high risk of flooding. In large buildings the share was slightly larger at 10%. The risk assessment for apartment buildings and their units varies greatly across metro areas. The data indicates that small buildings displayed a tighter spread around the national average compared to large buildings. An indication of the preference for scenic, albeit riskier, locations characterize the Read the full article…

For their relatively lower rent levels, small apartment properties are surprisingly well-rated by their occupants, both in terms of unit quality and the neighborhoods in which they are located.