Main Takeaway: New data shows that renters tend to be younger, non-caucasian, more likely to never have been married, are moving around more, and are more likely to identify as LGBTQ+. That said, preferences are highly local, meaning owners and operators should conduct their own surveys of tenants. And, internalizing these trends will help multifamily teams make more informed decisions amidst the broader transforming real estate landscape.
Story: Zillow released its 2022 Consumer Housing Trends Report (CHTR) report recently, and it contains some noteworthy trends for multifamily owners and investors. Here are the key data points worth highlighting:
- 55% of renters live in an apartment building.
- The typical rental unit has two bedrooms and 1.5 bathrooms
- 68% of recent renters moved from a previous rental.
- The typical recent renter submitted two applications.
- 68% of renters paid an application fee, between $40 and $59.
- 87% of renters reported paid a security deposit, between $500 and $999.
- 64% of renters say they are considering moving within the next three years.
- 45% of renters say they plan to buy their next home.
- The largest share of renters live in the South (39%), followed by the West (25%), and Midwest (21%).
- 51% of renters are single and have never married.
- 21% of renters live in a single-family detached house.
- Only 15% of renters plan to never move.
- The top rental concession renters reported was free parking.
Interestingly the trend is toward greater mobility among renters, likely due to the record high rents the national market is currently experiencing. According to a report, 71% of renters saw rent increases in 2021-2022, jumping an average of $245/month. 57% of renters with mom-and-pop landlords (own under 5 units) reported rent increases, jumping to 85% for renters with a larger landlord (own 10k+ units). This could be a contributing factor to increased mobility.
Renter Age and Income
The Zillow study also found that the average age of a renter is 39 years old, and the median age of those who moved in the last year is 31. Renters who lived in their unit for at least a year trended older, with a median of 42. The largest demographic group in the renter category were Millennials, taking 36% of the renter pool, followed by Gen Z (23%) and Gen X (20%).
Further, in 2019 11% of recent renters identified as LGBTQ+. In 2020 that number jumped to 16%, 22% in 2021, and then dropped to 18% in 2022. Renters also earned less income than the national average ($67,500), with renters earning approximately $42,500. Another report shows that 4 in 10 renters currently spend over 30% of their income on rent.
In terms of apartment sizes, 17% of renters lived in a building with fewer than 10 units, another 17% in a building with 10-49 units, and 19% in 50+ units. Despite mobility hitting new highs due to remote work, 70% of recent renters stayed within the same metro area, up from 68% in 2021.
Unsurprisingly, the number one concern for renters was staying within budget, followed closely by the right number of bedrooms and bathrooms. Of note, the next highest characteristic was for a preferable layout, gym, rooftop space, and other shared amenities.
Move to a Digital Renter
Of note, one in four recent renters said they didn’t do any in-person tours of their units before renting. The move to digital is an ongoing trend, with 36% of renters e-signing leases, up from 30% in 2020, and 21% in 2018. Further, 56% of renters currently pay rent online, with 69% saying they’d prefer to pay online.
The Smart and Eco-Friendly Renter
According to a recent Washington Post article, multifamily amenities and renter preferences are trending toward eco-friendly products and services. According to the article, “[p]opular eco-friendly items include LED lightbulbs, motion detectors and adjustable lights, plus energy-efficient washers, dryers and dishwashers — all of which can help save on energy usage and costs. Similarly, low-flow sinks, toilets and shower-heads help minimize water use, bringing down waste and water bills.” This also includes a growing amenity preference for electric vehicle charging stations and community gardens.
Renters are also trending to prefer smart technologies. According to another report, renters increasingly prefer properties that have access control devices, smart thermostats, smart lighting, and smart appliances.
Finally, in a survey conducted earlier this year renters outlined the specific in-unit amenities they were willing to pay more for:
- Washer/dryer in-unit ($54.73 monthly premium)
- Air conditioning ($54.73)
- Soundproof walls ($46.21)
- High-speed internet access ($47.93)
- Walk-in closet ($43.46)
Renter Profile Expert Take
“It’s important to note that, beyond national trends, there are several market-level nuances affecting renter preferences…National data paints an overall picture for the industry, but it is vital for operators to keep a finger on the pulse of each individual market in their portfolios. Trends vary by region, by state, and by municipality and may stray significantly from national averages. A program that regularly polls prospects and solicits resident feedback is essential to successfully meet renter preferences and expectations.” — Kendall Pretzer, CEO of Grace Hill