How Resident Mix Impacts the Conventional Apartment Market

The old real estate axiom of “location, location, location” is taking on a new meaning in the world of data analytics for the apartment market. Property appeal often is dictated by its proximity to transportation as well as schools, restaurants, shopping and other urban amenities. The closer the apartment is to these and other creature comforts, the more likely U.S. apartment renters are to establish roots. Renters vying for prime locations have typically been painted with a broad brush based on their age and income. Usually they have been considered young and single or married couples who are leasing to get on their feet. But that’s changing. Within the mix of the country’s 57 million renters that occupy 20.8 million apartment units are eight distinctive renter segments that offer valuable, granular information to investors, according to recent RealPage research. Study shows renter segments not the same from market to market RealPage has identified renter profiles and their locations using a cluster analysis method based on 5.7 million lease transactions in 25 large metros and as many small markets. Markets were determined by region, economic growth pace and construction rate. The search was based on renter age, income, marital/single status and whether children or pets were living in the apartment. Product selection behaviors were identified based on monthly rent, rent-to-income, unit size, product class, neighborhood (urban versus suburban) and length of stay. The results say that the U.S. apartment renter households tend to fall in one of eight categories: Renters Starting Out (29 percent), Young Adult Roommates (21 percent), PermaRenters (16 percent), Middle-Income Boomers (11 percent), Moving on Up (8 percent), Working Families (6 percent), Young Couples (5 percent) and Pet People (4 percent). Renter segments aren’t the same from market to market as one might suspect. Only a handful of big metros have renter profiles that...