How Demographic Shifts in Renting are Impacting Multi-family Housing

Challenges Builders are Facing in the 2024 Market – Know Your Renters

Who Are the Urban Renters? 

In cities, the largest demographic of renters are usually young professionals in their 20s and 30s, often single or living with roommates. Some well-off young families are also choosing urban rentals for convenience. With higher incomes and advanced degrees, these urban dwellers crave proximity to work and amenities. The preferences of urban renters are driving demand for large complexes loaded with luxury amenities. Think gyms, pools, shops and cafes in the lobby and co-working spaces. Mixed-use developments are hot, blending living, working, and entertainment spaces into one sleek package. 

Who Are the Suburban Renters? 

Suburban renters are a diverse bunch, ranging from young professionals in their late 20s to families and older adults, nearly evenly split. They look for larger spaces, mainly single-family spaces. They move out of the city for better schools and more space. Suburbanites tend to have moderate to high educational backgrounds and stable incomes, though generally lower than their urban counterparts, due in part to one-income families, where one parent takes the lead in child care of very young children. In the suburbs, you’ll find a mix of mid-range housing, duplexes, townhouses, and smaller complexes. Instead of high-end amenities like private pools and on-site gyms, developments often include landscaped parks and community centers.

Who Are the Rural Renters?
Rural renters are typically middle-aged and older, mostly in the 45-64 age range. These folks are often empty nesters, retirees, or individuals craving a quieter lifestyle, with fewer families greater than two people compared to the suburbs. Their educational backgrounds are varied, from high school graduates to some college education, and their income levels are generally lower, matching the area’s cost of living. Rural housing trends lean towards economy housing, small complexes, and simple duplexes. Developments are usually modest with fewer amenities, and there’s a growing interest in affordable options for lower-income renters and retirees.

What Other Issues Are At Play?

Of course there are plenty of outliers within these demographics, plus there are recent shifts that are only now beginning to influence the industry – therein may lie an opportunity for builders. It’s also important to keep in mind the other factors influencing the multifamily housing market, including affordability, the rise of remote work, and the expectations around sustainability. Sky-high rents in cities are pushing people towards the suburbs and rural areas who wouldn’t normally gravitate there. This shift means more mid-range and economy housing developments are popping up to meet demand. Remote work is also changing the game – without the need to be close to the office, renters are picking homes based on lifestyle preferences. This means more spacious, comfortable options in the suburbs and countryside. Eco-friendly features have become a must, especially for younger renters. Energy-efficient appliances, low-flow, high-performance faucets and showerheads, green spaces, and sustainable materials are all the rage. Developers are stepping up with green practices to attract these environmentally conscious tenants. 

Demographic shifts are reshaping the multi-family housing landscape. Urban areas are seeing a boom in luxury apartments with tons of amenities, while the suburbs and rural areas are focusing on affordable, family-friendly options. Affordability, remote work, and sustainability are key factors driving these trends. For builders and developers, staying in tune with these changes is essential to meet the evolving needs of today’s renters.

The largest takeaway here is that all involved in the multi-family and even single family housing markets may want to consider throwing away preconceived ideas of who renters are and what they want. Things have changed and those who are first to see it will be the ones who will win a greater market share. 

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