The rental industry plays an integral part in the U.S. economy. Nearly 40% of all U.S. households live in rental units. Renter spending has gone up in the last few years, and for several reasons. For one, some people prefer living in rentals because of the amenities they provide. When you rent an apartment, you may have access to amenities such as a community pool, gym, pet spa, etc. Homeowners typically do not have amenities like these available to them for no additional cost. Another contributing factor is that baby boomers are downsizing – people born between 1946 and 1964 are moving to senior housing. These communities give them a quieter and more peaceful environment than the average neighborhood.
Additionally, on average, people are settling down and starting families later in life than in previous years. The average age people are getting married in the U.S. is 29. In comparison, the average age of marriage was 28 in 2012, and 27 in 2008. Later marriage means people are more likely to continue to rent throughout their late 20s and early 30s.
A Hoyt Advisory Study commissioned by the National Multifamily Housing Council (NHMC) and National Apartment Association (NAA) reveals that the apartment/multifamily industry and its 39.7 million residents contribute $3.4 trillion to the U.S. economy annually, supporting 17.5 million jobs. The report provides a detailed breakdown of the economic impact nationally, by state, and in 50 metro areas.
New data reveals how various aspects of the apartment industry have a positive effect on regional, state, and national economies. Resident spending contributes $3.0 trillion to the local economy each year (including $350.8 billion in taxes), while operations add $175.2 billion. Apartment construction provides $150.1 billion, and renovations and repairs add $69 billion.
Highlights from the report include:
- The apartment rental industry has created 16 million jobs.
- 328,000 new apartments are needed annually to keep up with the current demand.
- Producing enough new apartments to meet demand requires new approaches to construction, more opportunities, and fewer restrictions.
- Development costs and local regulations are making it difficult to build new apartments everywhere, but some areas are harder than others.
The graphic below shows a breakdown of popular metro areas. Honolulu and Boston were reported as being the most difficult cities to build new apartments, while New Orleans and Little Rock are among the easiest. Washington, D.C., is ranked in the middle as a moderate entry point.
The 50 states and D.C. generated $2.95 trillion of economic impacts and 14.2 million jobs in 2016. Sum of States (SOS) impacts increased by 21% ($518 in output) and 15% (1.86 million jobs) between 2013 and 2016.
The performance of individual states and metros was tied to impact growth drivers such as population growth, employment growth, tenure split, size and growth of the rental stock, renter household income gain, and average active rent growth. In general, the largest states and metros dominated, but with a few exceptions. Many mid-sized states and metro areas that have drawn an outsized share of the post-recession population and economic gains top their group rankings on a percentage growth basis.
The report provides evidence to back up the argument that the rental industry is contributing to national, state, and local tax economies. Tax payments relating to apartment operations, as well as tax payments by apartment residents, added $408.9 billion to the national economy. Such taxes fund schools, local infrastructure projects, and other essential services in communities across the country.
Rental properties offer obvious benefits to the economy. By renting an apartment, you’ll help to make the economy better. In times like today, economic recovery is always a welcomed effort. You can also enjoy the diversity of your apartment community and take on a new appreciation for living in an apartment.