Several critical factors — including an aging population, international immigration, and couples increasingly choosing to delay marriage — have resulted in projections indicating a need for the United States to add close to 5 million more apartments by 2030 in order to meet the demands of its rapidly changing population. This is according to a recent study conducted on behalf of the NMHC (National Multifamily Housing Council) and the NAA (National Apartment Association).
As it currently stands, the approximately 39 million people dwelling in apartments is already stressing the capacity of the apartment industry, a product of the fact that, over the past five years, an average of one million new renter households formed each year. Based on those figures, the United States needs to create 325,000 new apartment homes per year in order to meet the projections for future demand. The fact that an average of only 244,000 new apartment homes were built per year from 2012 to 2016 illustrates some of the inherent challenges associated with the growing demand for apartment housing.
It’s important to take a closer look at some of the underlying factors driving the rapid increases in demand for apartment homes in the United States. Since life events play such an important role in driving home purchases, the fact that so many Americans are waiting longer to get married is affecting the level of demand for apartment homes. Married couples with children account for less than 20 percent of households in the United States, a 25-percent drop compared to 1960.
The aging population of the United States is also contributing to the rising demand for apartment homes, as the research conducted by the NMHC and NAA indicate that people 55 and older will be responsible for over 30 percent of future rental apartment homes. Over the last 10 years, the demographic of people age 45 or older made up more than 50 percent of the net increase in rental apartment households, a trend that is expected to continue going forward.
Immigration will also have a substantial impact, but disproportionately so in the border states: 51 percent of all population growth in the US is expected to come from immigration, which will in turn drive the increased demand for apartment housing across the country.
Although the entire country should expect to be affected by the changing population and the growing demand for apartment housing, certain regions of the country are likely to experience greater increases when compared to others. Western states, along with Texas, North Carolina, and Florida, should expect to see the sharpest increase in demand for rental apartment housing through 2030, particularly in cities like Austin, Raleigh, and Orlando.