Families comprise about one-third of the U.S. renting population, while apartment buildings targeted at young urbanites without kids make up the majority of all new rental housing in the country.
So asserts a new report from the Urban Land Institute Family Renter Housing: A Response to the Changing Growth Dynamics of the Next Decade, which lays out the extent of the problem and presents a number of case studies that illustrate potential solutions to the family rental housing shortage. Among these are rental townhomes, urban apartments of greater size and tax incentives to build affordable apartment units.
The population of renting families is expected to surge through the rest of this decade and beyond, due to more and more Millennials having children, as well as the rising costs of housing and falling homeownership rates.
But the average new apartment measures a little more than 900 square feet and costs the renter occupying the unit $1,600 monthly. In both size and cost, this new residence doesn’t come close to meeting the needs of families, most of whom earn less than $50,000 yearly.
This gap is creating a business opportunity for developers who can create new and interesting multifamily housing model targeted at a wider spectrum of renters, including families.
Family renters have virtually the same number of children on average as family owners, meaning they require the same amount of space. But most new rental units are much smaller than for-sale residences of a comparable vintage.
Evidence presented by the ULI report indicates that developers are responding to the opportunity in various ways. Though numbers remain small and don’t meet growing demand, units being built offer floor plans, amenities and locations appealing to families. They include suburban rental apartments, suburban single-family rentals, rental townhouses, attached and detached apartments, urban rental apartments for families, as well as mixed-income and affordable housing.
The discrepancy between supply and much-faster growing demand is the result of several factors ranging from developer resistance and unfamiliarity to regulatory obstacles and limitations, ULI reports.
While the report was written before the onset of the COVID-19 pandemic, the authors added to the end of the report a note about what the health and economic crisis may mean for rental family housing. They find that while the pandemic-related economic hardships of the American family will likely be temporary, the damage to their finances from the crisis may further encourage family renting.