Missing Middle and Other Multifamily Musings

Lew Sichelman

Now that spring has sprung, here are some items that have lingered on my desk for too long.

The for-sale housing sector often speaks about the so-called “missing middle,” that segment of the market that nobody seems to satisfy. But the multifamily wing has a missing middle of its own: People who never rent.

According to the latest data from the National Association of Realtors, 30 percent of Generation Z home buyers in 2022 went right from a family member’s house to one of their own.

Gen Z buyers, those ages 18 to 23, accounted for just 4 percent of all existing home sales last year. But when you consider that some 5 million such houses changed hands, 4 percent is still a powerful lot— 200,000 to be exact.

And apartment owners missed out on every one of them. According to NAR,13 percent of all buyers last year jumped into home ownership from their parents’ house or that of another relative or friend. Six percent paid rent where they used to live but 7 percent did not.

The largest segment of the missing middle was the GenZers, those youngsters born between 1999 and 2004. But 30 percent of buyers born between 1990 and 1998 also eschewed apartments and went right into ownership. And so did 14 percent of those born between 1980 and 1989. NAR calls these latter two groups younger Gen Y Millennials and older Gen Y Millennials, respectively.

Participants in the study gave the usual answers to why they bought houses. The desire to own a home on their own was No. 1. But a couple of other reasons might tickle the antennas of those who build and rent apartments, One was the desire to build financial security. Another was a desire to have a better place for their pets,

While apartment sizes are trending smaller, most people bought houses with three bedrooms and two full baths.

It’s a tough economy out there, which is probably why some 8 million adults reside in a household that is behind on its rents. But about 3.6 million reside in a household that’s not being charged any rent—none at all.

To come up with these figures, LendingTree, the popular mortgage matching service some people use to find financing, analyzed data from the Census Bureau’s Household Pulse Survey. It was the latest data available at the time.

People who live rent-free are not those who own their places free-and-clear, nor do they live with someone else who does, LendingTree explained in a recent report. Rather, they are occupying “some type of rental unit” where rent is not necessary.

For example, people in these types of households could be caretakers who are provided their home rent-free in exchange for their services. Or they might be janitors, farm workers or someone who even buys an apartment building at a discount in exchange for allowing the seller to live rent-free in one of the units.

In all of these examples, the key distinction is that these people are NOT living in the same house or apartment as the owner, stresses LendingTree Senior Economist Jacob Channel. “They’re all living in their own separate home or housing unit that they aren’t being charged rent for.”

More Pets, Please

Pets are taking center stage when it comes to renting new digs, Zillow reports.

Pet-friendly filters are some of the most used among would-be tenants on the popular Zillow housing search engine, the company says. Twice as many potential renters filter for pet-friendly listings as they do for any other amenity, underscoring the high demand for rental homes that allow pets.

“Pets are widely considered part of the American family, so it makes sense that they factor into moving decisions and impact housing preferences,” says Zillow’s Amanda Pendleton.

According to the site’s latest Consumer Home Trends Report, 59 percent of renters last year reported having at least one pet, up from 46 percent in 2019, as pet ownership soared during the pandemic. Yet, only 55 percent of the thousands of house and apartment listings on the site indicated they allow pets.

For Good Measure

For the first time in more than a decade, a new floor measurement standard has been released for multi-family properties, both existing and those under construction.

The latest standard includes a uniform methodology for measuring floor areas, including outdoor amenities, retail spaces and non-living areas. It was issued by the Building Owners and Managers Association, which last updated the rules in 2010.

The BOMA 2023 Multi-Family and Hospitality Standard provides a framework to determine floor areas for hospitality properties as well as multi-family buildings. It offers two distinct ways to determine square footage, a gross area measurement as well as a net area method. It also allows for a partial and overall measurements.

Because of the wide variety of architectural designs, space configurations and business requirements found in today’s market, BOMA says its new standard “goes into great detail to cover as many real-world property conditions as possible.”

However, while BOMA has established itself as the global authority in building measurement, its standards are purely voluntary and not a regulatory requirement.

Founded in 1907, BOMA is a federation of local American associations and global affiliates, representing commercial real estate professionals, owners, managers, service providers and other property professionals of all commercial building types, including office, industrial medical, corporate and mixed-use.

Its standards are regularly revised to ensure they address changing industry needs and compliance with the American National Standards Institute standards development process, of which BOMA is an ANSI Certified Standards Developer.