New Data Suggest Apartment Living Is Becoming More Popular: "Renter By Choice" Households Growing

WASHINGTON, DC -- Recent data support the notion that an increasing number of households now prefer apartment living, even though they could afford to buy a home. Fully 41 percent of renters surveyed in the 2001 Fannie Mae National Housing Survey say they rent "as a matter of choice" and not out of necessity. This is up significantly from 32 percent in 2000 and 28 percent in 1999.

"The fact that a growing number of households choose to rent clearly refutes the conventional wisdom that homeownership is a universal dream of all Americans," notes Doug Bibby, President of the National Multi Housing Council. "This survey is just the latest piece of evidence that America's housing preferences are changing. As life gets more hectic, as commutes get longer, and as the age and composition of our population changes, many households are deciding that apartment living is a preferred lifestyle."

Further bolstering this otherwise anecdotal trend is recent NMHC analysis of the 2000 Current Population Survey (CPS). That research reveals that despite thenation's historically high homeownership rate, the number of apartment renters has actually grown, and much of that growth is concentrated in the highest-income groups. For the past three years, households making $50,000 or more have been the fastest growing segment of the apartment market. After growing an average of 8 percent annually for several years, there are now 5.6 million apartment renter households making more than $50,000.

"Changing demographics is a key reason why apartment demand is up," says Bibby. "The Census Bureau is projecting a boom in the population groups most likely to choose an apartment — young adults, one-person households and married couples without children. For many of these households, apartments offer hassle-free living in superior locations near jobs, entertainment and shopping. They also make it easier for households to move from one job to another without incurring the cost of selling a house."

New apartment designs and amenities are also making them more desirable. Today's apartments are larger, and they include finishes such as attached garages, built-in, pre-wired entertainment centers, private alarm systems, granite counter tops, oversized Jacuzzi bathtubs, crown molding, gas fireplaces and more. A single call to the on-site concierge can arrange babysitting, housekeeping, pet care, grocery shopping or a night on the town. High-speed Internet access, on-site fitness centers, cyber cafes, business centers, movie screening rooms, billiards rooms and more make apartment living very competitive with single family living. And then there are the new e-commerce capabilities of many apartment communities, such as online apartment leasing, rent payment, resident chat areas, and maintenance service requests.

"Financial factors also play a role in creating new apartment renter households," says Mark Obrinsky, NMHC Vice President of Research and Chief Economist. "Tax law changes passed in 1997 have caused many Americans to question the assumption that owning a home is better from an economic standpoint than renting. Under those changes, the first $500,000 of capital gains on homes sold by joint filers ($250,000 for single filers) are now exempt from taxes. Freed from the prospect of incurring a huge tax liability, many empty nesters are choosing to leave cutting the grass, repairing the furnace and shoveling snow behind in favor of renting. Having paid down their mortgages, many members of this group are now able to reallocate their wealth -- completely tax free -- into a broader array of investments."

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Based in Washington, DC, NMHC represents the interests ofthe nation's larger and most prominent firms participating in the apartment industry.NMHC's members are engaged in all aspects of the development and operation of apartment housing, including ownership, construction, management, and finance of such communities.