Rental properties in nearly every category saw significant tenant increases last year, enjoying their greatest growth in a decade, according to a new report just issued by the Joint Center for Housing Studies of Harvard University.
The report, America’s Rental Housing 2022, says that near the end of last year the number of people living in apartments stood at 44 million. That’s an increase of around 870,000 over the same time period in 2020.
Meanwhile, the nation’s overall rental vacancy rate has dropped to just under 6%–the lowest such figure in nearly four decades.
Vacancy rates significantly dropped in the higher-quality segment, but even in what is described as the moderate and lower-quality segments, vacancy rates were as low as 3.7%.
As a result, notes the Harvard study, “asking rents for all professionally managed apartments spiked in the third quarter, led by a 13.8% jump for units in higher-quality buildings.”
As these trends play out, the trend of apartment property ownership going from individuals to business entities has increased, jumping from 18% in the last decade to 26% in 2021.
But a simultaneous trend, which the Harvard report attributes to the ongoing presence of the pandemic, has seen 15% of all tenants falling behind on their rents.
“Lower income renters were especially hit hard by income losses,” and were most “likely to fall behind on rent,” says the report, noting that 23% of renters earning less than $25,000 annually were in this category.
By comparison, “just 5% of households making more than $75,000 owed back rent.”
Due to the ongoing demand, the report forecasts additional apartment construction in the immediate years to come, but adds that “several obstacles stand in the way of building housing for low and moderate-income renters, including rising construction, labor, and materials costs as well as regulatory restrictions preventing the construction of new multifamily housing.”
The report adds that cities and towns willing to tackle the thorny challenge of updating zoning regulations to allow for more multifamily or apartment projects, “would help address the supply shortage and expand the options for where renters can live.”
By Garry Boulard
