Renting a property or apartment long-term is the only viable solution for many Americans as lending standards stay tight and potential buyers struggle with downpayments. This in turn makes multifamily ownership and development a bigger issue for the nation’s housing agencies.
Approximately 1 in 5 American households reside in multifamily rental buildings, according to data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
The two entities launched a survey to provide more insight into the nation’s multi-family rental properties.
“The Rental Housing Finance Survey fills an important gap in our understanding of who owns multifamily rental housing — mostly individuals, not large companies — and how multifamily rental housing is financed, especially as the structure of finance is changing,” said Erika Poethig, HUD’s acting assistant secretary for policy development and research.
To conduct the survey, HUD and the Bureau combined previously known information with newly researched data on property values, residential structures, rental status and value of units within the structures, commercial use of space, property management status, ownership status, and a detailed assessment of mortgage financing and benefits received from Federal, state, local and non-governmental programs.
With this data, HUD can better understand the multi-family rental loan origination volumes, property characteristics with these originations and operating cost and revenue characteristics for the multi-family rental space in the U.S.
The survey found that in the United States, there are 2.3 million multi-family rental properties, of which 73% are just on building.
Of the 2.3 million properties, only 77% provide parking and 19% contain buildings built prior to 1920.
Of two-to-four unit multifamily rental properties, 54% have a mortgage compared to 85% of properties with over 50 units.
Eight-seven percent of multi-family properties owners reported making repairs to their properties in 2010 or 2011, of which the median cost was $699 per housing unit.
Sixty-nine percent of all multi-family rental property owners reported making capital improvements to their properties in 2010 or 2011, of which the median cost was $1,156 per housing unit.
All the developments in the sector explain one key finding of the HUD and Census Bureau report: The agencies concluded that “Multifamily rental housing is critical to solving the nation’s affordable housing problems, and potential investors in the multifamily rental housing market will gain a better understanding of the ownership and financing structures of the industry with these data.”