In 2011, multifamily property investment became a hot commodity again, especially in large metropolitan areas such as Washington, D.C. Wonder why?
There are many factors involved in the stimulation for multifamily properties. At the end of 2010, homeownership was just under 67 percent. By September of 2011, it had dropped even further down to about 66 percent.
This made renting a more affordable alternative to homeownership. Currently, D.C. Is a driving force behind building a strong multifamily housing market. This is due to the region’s economic and demographic trends. Here are seven specific reasons behind the boost in this market:
1. Unstable Incomes
The current conditions in our economy have caused incomes to decrease and become unstable. This makes it harder to obtain homeownership, driving more citizens in the direction of rentals. Although mortgage rates are at record low rates, decrease in affordability makes it impossible for many to own a home. As the demand for rental properties increases, investors are taking advantage of this current housing market trend by investing in multifamily properties for rental income purposes.
2. Diverse Rental Pool
The Washington, D.C. Metro area is known to attract a young, educated workforce. But, at this time, most apartment rentals in the area are occupied by those under and over the age of 35. This diverse age groups increase the need for rental housing communities that attract everything from young college students to golden age professionals… a housing investor’s dream market.
3. Renting Less Stressful
Although the median household income in D.C. Is about $84,500, 70 percent more than the U.S. Median, many still choose to rent instead of buying. Many know that when you factor in the tax advantages that come with being a homeowner, make it cheaper in the long run. But, still, the majority chooses to be renters right now.
4. The Average Citizen Has to Rent
75 percent of D.C. rentals belong to households below the median income level. About one-third of them have household incomes below $35,000. This increases the demand for rental properties across the region, especially those that can be afforded by lower income households.
5. Household Sizes Have Changed
Remember when the “normal” household in urban regions consisted of a married couple with 2.2 kids, a dog and a house? Now, it’s also “norm” to be a single person household, which is the largest percentage of renters in D.C. This shift in family dynamics makes it necessary to increase the amount of multifamily units to accommodate both types of households.
6. People Increase Demand
During the recent recession, droves of people migrated to the D.C. area. It’s estimated that about 67,000 more people will move to the region within the next five years.
7. The Younger and The Older Are Renting in D.C.
the age dynamics of the Washington, D.C. population has changed in recent years. The 20-somethings of the past are now in their 30′s. They are still seeking to rent, while the amount of renters over the age of 45 also continues to grow. This group, in general, can afford to own property in just about any D.C. area they choose, but they simply choose to rent. Which means they are choosing to rent in high income, professionally dominated areas. This has increased a need for more upscale multifamily housing.
Diversified Housing Needs
Due to the current housing choices of the citizens of Washington, D.C., the need for multifamily housing units continues to increase. The regions rental market consists of all age groups, making it necessary to diversify the types of rental properties available. As this trend continues to grow, it’s imperative that housing investors tailor their marketing methods, as well as housing amenities, to attract multiple, diverse groups of people.
This guest blog was provided by Allison Klein who helps home buyers purchase homes for sale Fort Collins and many other areas in the Northern, Colorado real estate market including Loveland CO real estate and Windsor CO real estate.
