Consumers flock to apartments

 

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  • Posted on: November 5, 2010
  • STAT OF THE MONTH

Homeowner Exodus

Consumers flock to apartments as American housing psychology reacts to the recession.

By:
Chris Wood

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Apartment executives still puzzling over improving occupancies in the absence of job growth need look no further than housing tenure data gathered annually from the American Community Survey (ACS), conducted by the U.S. Census Bureau and most recently released in September. Housing tenure, which measures the balance between owner-occupied and renter-occupied housing units (both multifamily and single family), provides a glimpse into the macro population migration in and out of the for-sale and rental markets. For the past three years, the data has shown a decidedly rosier picture for the apartment sector.

After peaking at a historical high of 67.3 percent in 2006, the proportion of owner-occupied units has steadily declined in tandem with the recession as American households are financially and electively precluding themselves from homeownership. The comparative result has been a surge in the proportion of renter-occupied units, which at 34.1 percent in 2009 is approaching its decade high of 34.7 percent. Statistics released in September as part of the Fannie Mae National Housing Survey cast light on the exodus: Only 67 percent of Americans think buying a house is a safe investment, a steep decline from the 80 percent that considered housing a great place to sock away cash in 2003.

These surveys are showing what we are seeing anecdotally in the multifamily business today, says Doug Bibby, president of the Washington, D.C.-based National Multi Housing Council. âEven though job growth has been pretty tepid, we are seeing occupancies edging up and rent growth. That reflects the changing psychology of housing. The fact that a lot of people got burned because of houses that they could not afford or are underwater on their mortgages has moved the needle on housing being merely an investment to housing being shelter. That is good for the economy and the society.

MULTIFAMILY EXECUTIVE November 2010