Facts About Apartments

People in the building industry know that multifamily housing has a significant image problem. That is why the National Association of Home Builders (NAHB) and Long Island Builders Institute are committed to debunking the myths and misconceptions associated with new apartment development that often play into the “not-in-my-backyard” syndrome.

Many people, including many public officials believe that apartments negatively impact both local schools and the property values of surrounding single-family homes. Neither of these scenarios is true, according to NAHB research.

Although it is true that the number of school-aged children varies by housing type (especially the number of units in the structure), it is not true that apartments impact schools more drastically than other housing types. The reason? Simply put, fewer children live in apartments than in other types of homes.

According to data from the U.S. Census Bureau, there are about 55 school-age children (ages five through 18) for every 100 households in the United States. The same data show that slightly less than 37 school-aged children per 100 live in apartments. The number of school-aged children tends to be even lower in larger apartment buildings—less than 29 school-aged children per hundred units in buildings with at least 20 apartments.

Another commonly held notion about new multifamily development is that it will reduce the value of surrounding property, particularly single-family homes. According to NAHB research, however, there is no evidence to support such an idea. NAHB’s research indicates that between 1987 and 1999, single-family homes that were located near apartments in 1987 actually appreciated at a somewhat higher rate than single-family homes that were not near apartments. This was true whether the nearby multifamily buildings were low-rise, or mid- or high-rises.

Here’s another fact that most people don’t know: New apartment development has an immediate and long-lasting effect on a community’s prosperity. According to NAHB’s economic research, the construction of 100 new apartments in the average city results in 122 new jobs, $579,000 in local taxes and fees, and $5.2 million in local income generated by workers and businesses. The on-going, annual effect of 100 new apartment households in a local economy is 46 local jobs, $308,000 in local taxes and fees, and $1.8 million in local wages and business receipts.

NAHB’s research also shows that apartments serve a broad and diverse market, ranging from young professionals establishing new households to empty nesters who want convenience and flexibility to senior citizens looking for service-enriched communities. Equally important, multifamily housing is often the first step on the housing ladder for working families.

There’s more good news. Today’s apartment communities offer residents more space and amenities than ever before and are managed by professional companies dedicated to customer service. Today’s apartment renters (30 percent of whom earn more than $50,000 a year) care about having quality housing choices that offer an attractive financial and lifestyle option.

We are living at a time when more than a million new households are being formed annually. America’s home builders will have to construct between 1.3 and 1.5 million new housing units just to meet the underlying demand for shelter during the next decade. Many of these housing units must be in apartment communities if we are to meet the needs of consumers and fulfill the public’s mandate to “grow smarter.” Every community needs good multifamily housing—luckily, good multifamily housing is also good for every community.

Demand for rental apartment homes continued to gain momentum in the fourth quarter of 2004. Continuing the previous quarter’s trend, all classes of rental apartments showed gains on the index gauging demand in the fourth quarter of 2004.

The biggest increase in demand was reported for Class B apartments – the mid-range rent category – which jumped 8 points from a year ago to its current index value of 50.8. Demand for luxury units rose 5 points during the fourth quarter of 2004 over the previous year’s fourth quarter, while demand for low-rent communities rose about 7 points during the same period And survey respondents expect that rising trend to continue over the next six months.

The index tracking the number of apartments available for rent continued its downward trend, registering a 13.2-point drop from 69.6 in the final quarter of 2003 to 56.4 in the fourth quarter of 2004. During that same period, the index tracking the volume of calls from prospective renters increased, rising nearly 4 points to 50.0, up from 45.9. The current average vacancy rate for rental apartments is 7.8 percent, down from 8.5 percent in the previous quarter.