A Look Into the Future: 10 Multifamily Statistics You Need to Know in 2024

Top Predictions & Multifamily Statistics to “Survive Until ’25”

In the multifamily sector, some phrases have been going around: “Survive until ’25” or “Thrive in ’25.”

But are these mantras a mere call for endurance, or could they unveil a silver lining? Opinions vary widely. 

For some, the coming years spell unprecedented opportunity, while for others, the future looks daunting, shadowed by past decisions. 

However, what’s becoming increasingly clear is the emergence of a buyer’s market unlike any we’ve seen in recent memory, promising to breathe new life into the industry. The exact timing remains uncertain, but the anticipation is palpable.

So, how do we position ourselves in this period of uncertainty? Our focus shouldn’t just be on surviving and seizing the moment to thrive. This is where true innovation lies — leveraging even the most modest marketing budgets to make an impact and set the stage for significant growth. 

With this mindset, here are 10 pivotal multifamily statistics every executive should consider as we chart our course through 2024:

1. Occupancy Rates Anticipated to Climb to 6.25%

The national multifamily vacancy rate is anticipated to climb to 6.25%, marking a notable shift in the market. This adjustment comes in the wake of substantial new construction deliveries, which have altered the dynamics of the apartment rental market. As of December 2023, the national occupancy rate dipped to 94.1%, the lowest since January 2014. This represents a significant drop, positioning December 2023’s occupancy over 100 basis points behind the decade’s average of 95.4%.

2. Average Rent Growth Expected Between 1-1.5%

This year, modest rent growth is expected between 1.0% and 1.5%, with the potential for further deceleration should job growth falter significantly. This reflects a market stabilizing after the turbulent rent fluctuations experienced during the pandemic years. This growth rate balances affordability concerns and the need for investment returns.

3. Digital Engagement on the Rise

The digital frontier of apartment hunting continues to evolve, with over 80% of potential renters initiating their search online and 75% expecting virtual tours as a standard offering. 

Adding to the digital engagement narrative, a joint study by SurveyMonkey Audience and Binary Fountain reveals a compelling insight: 64% of renters are willing to pay a premium for properties that boast positive online reviews. This multifamily statistic underscores the importance of bolstering a property’s digital presence and actively managing and enhancing its online reputation to attract and retain tenants.

Here are a few more multifamily statistics from the report:

• 93% of U.S. apartment seekers have used online reviews in their rental property search.
• 74% of renters read between one and 10 reviews before deciding on their rental property.
• 85% reported looking at online reviews after a friend or family member’s recommendation.
• 64% said they would pay more for a highly ranked or reviewed property.
• 58% used Zillow to find apartment ratings and reviews, followed by Google (51%) and Apartments.com (48%). 
• Google was the leading choice for sharing experiences at 31%, followed by Facebook at 27% and Apartments.com at 24%.

4. 60% of Renters Seek Sustainability

An increasing number of renters prioritize sustainability in their housing choices, with a recent survey by Apartments.com highlighting this shift. The survey revealed that 60% of renters actively seek out environmentally friendly apartments, indicating a significant demand for green living options. 

Moreover, a quarter of these respondents are willing to pay a premium for such amenities, underscoring the value they place on sustainability. Notably, 17% stated they would not consider renting an apartment that doesn’t embrace green practices. 

Among the eco-friendly features in high demand, on-site recycling programs and energy-efficient windows emerged as the most coveted by renters, pointing to specific areas where multifamily properties can invest to attract eco-conscious residents.

5. 51% of Renters Consider Smart Home Tech Essential

The demand for smart home technology among renters, especially those with incomes exceeding $100,000, transforms it from a luxury to a necessity. A striking 51% of these renters now consider smart home technology essential, while 48% view property technology (Proptech) as indispensable. 

The willingness to invest in these amenities is notable, with over half of the respondents ready to pay an additional 1-10% for properties with advanced technology. Furthermore, nearly three in ten are open to paying at least 11% more, emphasizing the growing significance of proptech in the rental market.

6. 72% of Renters Own Pets

With 72% of renters owning pets, pet-friendly amenities and policies have become crucial. Offering pet parks, grooming stations, and flexible pet policies can significantly enhance property appeal.

7. 55% of Renters Seek Home Office Space

The work landscape has undergone significant transformations, increasingly influencing renter preferences within the multifamily sector. Currently, 55% of potential residents are looking for living spaces that cater to their remote work needs, with a demand for units featuring dedicated home office spaces or co-working amenities. This trend is not fleeting; it’s a solid shift towards accommodating the growing work-from-home culture.

As of 2023, 12.7% of full-time employees have embraced fully remote roles, while 28.2% are navigating a hybrid work model. However, 59% of the workforce still operates in traditional in-office settings. This multifamily statistic serves as a reminder that, despite the increasing prevalence of remote work, the conventional office-based work model remains predominant.

However, the trajectory for remote work points towards a future where it becomes even more commonplace. Upwork’s projections indicate that by 2025, the remote workforce is expected to swell to 32.6 million Americans, representing approximately 22% of the workforce. 

For multifamily property developers and managers, these multifamily statistics underscore the importance of adapting to the changing needs of the workforce. As remote work becomes more entrenched, the demand for multifamily units that support this lifestyle is expected to rise. Integrating dedicated workspaces and flexible co-working options into multifamily properties will not only meet the evolving preferences of residents but also position these properties as attractive choices for the growing workforce segment that values the ability to work from anywhere.

8. 74% of Renters Are Gen Z

Generation Z is not just stepping into the rental market; they’re taking it by storm, currently representing a renter-majority generation with a 74% share. This demographic has added 4.5 million renters in the last five years, surpassing any other age group in growth. Their preferences are reshaping the rental landscape, emphasizing the importance of high-speed internet, active online community engagement, and the need for flexible lease terms.

This surge in young renters comes when homeownership shows a clear age divide: while 79.3% of those aged 65 and above own their homes, a stark contrast is seen in the under-35 age group, where 65% of American households are rented. The multifamily statistics from Wood Group Mortgage further illustrate this divide, highlighting the evolving dynamics of the housing market.

Moreover, the median age of homebuyers now stands at 47, compared to the median age of renters at 38, indicating a broader trend towards delayed homeownership. This shift is perhaps influenced by the sentiment among millennials, 64% of whom express regret over purchasing their homes, a feeling only shared by 33% of baby boomers.

Understanding these trends is crucial for multifamily professionals looking to attract Gen Z renters. Catering to their tech-savvy and value-driven preferences will be vital in securing them as tenants and adapting to the broader shifts in the rental and homeownership landscape.

9. Investment Volumes Decreased 60%

As we embrace the mantra of “survive until ’25,” the multifamily investment sector in 2024 is navigating through a period of cautious optimism marred by a significant downturn from the previous year. Investment volumes dropped by 60% in 2023 to a low not seen since 2014, and the start of 2024 hasn’t shown the rebound many hoped for. 

This cautious approach stems from a complex interplay of declining interest rates failing to stimulate investment and concerns over NOI growth amidst rising vacancies, despite a robust absorption rate offset by new market entries.

The latter half of 2024, however, may offer a silver lining. With anticipated Federal Reserve rate cuts and an expected boost from loan maturities, there’s potential for a revitalized transaction pace reminiscent of the pre-COVID era. 

Drawing from past downturns, where multifamily led the recovery after a two-year lull, there’s cautious optimism that the sector can navigate current uncertainties, aligning with the broader goal of thriving beyond survival in the multifamily landscape.

10. 30% of Renters Spend More Than 30% of Income on Rent

Despite an overall robust market, the multifamily sector faces significant affordability challenges. A concerning multifamily statistic reveals that over 30% of renters are spending more than 30% of their income on rent, underscoring the pressing issue of balancing rent growth with affordability. A notable shift in homeownership trends further compounds this dilemma. 

According to iPropertyManagement, homeownership has declined, with 36% of American households now opting to rent rather than own. This shift is significant, reflecting broader economic and societal changes.

Complicating the picture, Flex reports that only 45% of renters feel financially positioned to purchase a property in their city, considering the average home prices. This multifamily statistic is particularly striking when compared to the median household income of homeowners in the U.S., which stands at $72,615. These figures highlight the widening gap between the cost of owning a home and the financial realities facing many renters today. 

As we navigate these complex dynamics, the multifamily sector must grapple with the challenge of making housing both accessible and affordable, all while adapting to the evolving preferences and needs of a diverse renter population.

What Do Renters Really Want?

Navigating the multifamily market requires a deep understanding of renter preferences and expectations. A recent survey sheds light on the disconnect and alignment between renters and landlords, offering valuable insights for multifamily executives aiming to refine their offerings. 

Here are the key findings:

• 76% of renters believe landlords have a “pretty” or “very” good understanding of what they desire in a rental property.
• 86% of property managers are confident they understand renter preferences at least well.
• Renters were willing to pay more than property managers expected for three amenities: convenient payment options, guest parking, and flexible lease terms.
• Property managers overestimated renters’ willingness to pay extra for pet-friendliness and proximity to high-quality schools.
• A significant 48% of renters prioritize specific features over affordability. 
• In contrast, only 18% of landlords believed that features were more important to renters than affordable rental rates.

These insights underscore the importance of multifamily executives and property managers aligning their offerings with renter preferences, mainly when misconceptions about value and priorities exist. By focusing on the amenities and terms that renters truly value, multifamily properties can better meet the needs of their target audience, ensuring satisfaction and fostering loyalty.

Understanding these multifamily statistics provides multifamily executives with a comprehensive view of the current market trends, renter preferences, and investment dynamics. With this knowledge, industry leaders can devise strategies to address today’s challenges and capitalize on emerging opportunities to ensure sustained growth and success in 2024.