Renters are Paying More for Less
CNN recently reported that in 2016 apartments entering the rental market are 8% smaller than they were 10 years ago. Currently the average square footage for all new apartments in the United States is 934 square feet compared to 1,015 square feet 10 years ago.
Studio apartments have seen the largest drop in square footage.Studio apartments have decreased in size by 18% since 2006 while one bedroom apartments have shrunk by 5% over the same period. While apartments entering the market are smaller than in previous years there has been a rise in rental prices by 7% over the last five years. The main reason for the drop in square footage per apartment is because as developers face higher construction costs due to rising land costs and increased regulations developers are building more units per rental development in order to bring a higher return on investment. Adding to the high cost of development and the need to fit more units within a single building is that new buildings are being built in central downtown areas where there is not as much space for development. Even though there are more apartments per building being built, in new building rent continues to rise with a large portion of individuals’ incomes are being spent on rent. As a landlord, buying a newer building with more units comes with positives and negatives. More units per rental buildings mean that a landlord can potentially bring in more rent every month than with a building with fewer units. However, more units’ means more potential for turnover, having to manage more tenants’ needs and smaller units are generally less appealing to older, more financial established tenants with families. As growing cities, such as San Francisco continue to face a worsening housing crisis it is likely the trend of tenants renting smaller apartments with higher monthly rent will continue for the foreseeable future. This post is provided by RISSOFT Residential and Commercial Property Management Software, specializing in innovative and cutting-edge property management software for all 50 states. Request a demo or contact us today to receive more information. Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.
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