Picture an America where soaring demand, record supply, and evolving renters are reshaping where we live, driven by the stunning fact that in 2023 the U.S. apartment market surged to 44.1 million units, fueled by a 2.5% annual growth rate and a massive $250 billion in annual revenue.
Key Takeaways
- The U.S. apartment market reached 44.1 million units in 2023
- Multifamily housing accounted for 18% of the total U.S. housing stock in 2022
- Apartment construction starts totaled 711,000 units in 2022
- National average rent reached $1,709 in December 2023
- Rent growth slowed to 3.1% YoY in Q4 2023
- Median rent for studios was $1,441 in 2023
- National vacancy rate was 6.6% in Q4 2023
- Occupancy rate for Class A apartments was 95.2% in 2023
- Absorption totaled 250,000 units in 2023
- Multifamily starts reached 460,000 units in 2023
- Under-construction inventory peaked at 800,000 units 2023
- Completions totaled 436,000 units in 2023
- Millennials comprise 45% of apartment renters
- Gen Z renters grew 20% from 2020-2023
- 37% of renters are aged 25-34 in 2023
The U.S. apartment market is expanding but facing growing affordability challenges.
Demographics and Consumer Trends
- Millennials comprise 45% of apartment renters
- Gen Z renters grew 20% from 2020-2023
- 37% of renters are aged 25-34 in 2023
- Single-person households represent 35% of renters
- 55% of renters prioritize amenities over location
- Remote workers increased apartment demand by 15%
- 62% of renters are non-homeowners under 35
- Hispanic renters grew to 25% of total in 2022
- Average renter household income was $52,000 in 2022
- Pet ownership rose to 70% among renters 2023
- 40% of renters under 30 prefer urban apartments
- Female-headed households 25% of renters
- EV charger demand up 30% among renters 2023
- 28% of renters aged 35-44 in 2022
- Shared living appeals to 22% of young renters
- Median renter age rose to 32 in 2023
- Black renters 20% of market share 2022
- Fitness amenities sought by 75% of prospects
- Boomerang kids boosted household formation 10%
- Tech-savvy renters 65% use apps for leasing
Demographics and Consumer Trends Interpretation
The apartment market is no longer just about four walls and a roof, but a curated lifestyle hub catering to a debt-saddled, pet-toting, tech-dependent, and amenity-obsessed generation that views remote work as a feature, homeownership as a fantasy, and an EV charger as a non-negotiable.
Market Size and Growth
- The U.S. apartment market reached 44.1 million units in 2023
- Multifamily housing accounted for 18% of the total U.S. housing stock in 2022
- Apartment construction starts totaled 711,000 units in 2022
- The rental apartment sector grew by 2.5% annually from 2018-2023
- U.S. multifamily occupancy averaged 94.5% in Q4 2023
- Institutional apartment ownership controlled 15 million units in 2023
- The apartment industry generated $250 billion in revenue in 2022
- Multifamily completions hit a record 509,000 units in 2021
- Apartment demand exceeded supply by 300,000 units in 2023
- The U.S. had 22.8 million renter households in 2022
- U.S. apartment inventory hit 44.2 million units Q1 2024
- Multifamily market cap rates averaged 5.4% in 2023
- Apartment sales volume reached $75 billion in 2023
- Rent rolls valued at $1.2 trillion nationally 2023
- Institutional portfolios averaged 25,000 units per owner
Market Size and Growth Interpretation
Despite feverish construction that's adding apartments at a near-record pace, the American rental market remains a pressure cooker, where relentless demand, astronomical valuations, and institutional consolidation have turned the simple need for shelter into a $1.2 trillion financial battleground.
Occupancy and Vacancy
- National vacancy rate was 6.6% in Q4 2023
- Occupancy rate for Class A apartments was 95.2% in 2023
- Absorption totaled 250,000 units in 2023
- Vacancy rates rose to 7.1% in new deliveries 2023
- Physical occupancy averaged 93.8% nationally 2023
- Demand for apartments was 320,000 units in 2023
- Stabilized occupancy held at 94% through 2023
- Vacancy increased 80 bps YoY to 6.9% in Q3 2023
- Net absorption slowed to 180,000 units H2 2023
- Economic occupancy dipped to 92.5% in 2023
- Stabilized vacancy at 7.2% Q1 2024
- Lease-up pace slowed to 92% in 60 days 2023
- Demand outpaced supply by 50,000 H1 2023
- Class B occupancy 93.1% nationally 2023
- Turnover rate averaged 48% in 2023
- Atlanta vacancy rose to 8.5% 2023
- Net absorption 220,000 units Q1-Q3 2023
- Economic vacancy 91.8% for new builds 2023
- Occupancy recovered to 94.1% post-pandemic
Occupancy and Vacancy Interpretation
The apartment market is a seesaw of resilient demand and oversupplied caution, where the posh towers are practically full while new ones try to charm renters with elbow room and a whiff of desperation.
Rental Rates and Affordability
- National average rent reached $1,709 in December 2023
- Rent growth slowed to 3.1% YoY in Q4 2023
- Median rent for studios was $1,441 in 2023
- One-bedroom rents averaged $1,630 nationally in 2023
- Rent burden exceeded 30% for 50% of renters in 2022
- Luxury apartment rents grew 4.2% in 2023
- Average two-bedroom rent was $1,884 in 2023
- Rent affordability ratio hit 28.5% of median income in 2023
- Suburban rents rose 5% faster than urban in 2023
- Effective rent growth was 2.8% in Sun Belt markets 2023
- Rent growth peaked at 14% YoY in 2022 early
- Asking rents up 25% since 2020 low
- Three-bedroom rents averaged $2,320 in 2023
- Rent concessions offered in 40% of units Q4 2023
- Affordability gap widened to 10 million units 2023
- Mid-tier rents grew 3.5% YoY 2023
- Rent-to-income ratio at 29% for millennials
- Phoenix saw 6% rent growth in 2023
- NYC median rent $4,100 in 2023 peak
Rental Rates and Affordability Interpretation
The brakes are being gently tapped on a rent rocket that has already soared to stratospheric heights, leaving half the passengers straining under the weight of the ticket.
Supply and Construction
- Multifamily starts reached 460,000 units in 2023
- Under-construction inventory peaked at 800,000 units 2023
- Completions totaled 436,000 units in 2023
- Permits issued for 450,000 multifamily units 2023
- New supply added 4% to inventory in top markets 2023
- Sun Belt construction boom added 200,000 units 2023
- Class B/C supply growth was 1.5% nationally 2023
- Total under construction fell 10% YoY late 2023
- Adaptive reuse added 15,000 apartment units 2023
- Forecast completions: 400,000 units in 2024
- 32% of new units were workforce housing in 2023
- Completions forecast 350,000 in 2024
- Under construction down 5% YoY Q4 2023
- 550,000 units permitted in top 50 markets 2023
- New deliveries 120,000 units Q4 2023
- Southeast supply growth 3.2% 2023
- Purpose-built student housing added 50,000 beds
- LIHTC units delivered 120,000 in 2022
- Total starts declined 25% late 2023
- Senior housing construction up 10% 2023
Supply and Construction Interpretation
The market is in the midst of a massive but rapidly cooling building binge, where we flooded the Sun Belt with new units, got clever with old buildings, and finally remembered to house our workers and seniors, all while the pipeline behind it all is now decisively slowing down.
Sources & References
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