Recent data reveal critical shifts that will reshape multifamily and affordable housing investments over the next decade, and real estate investors would be well served by paying attention to these transformative changes.
For example, we’re seeing interesting shifts in how Americans approach housing decisions. Mortgage payments have increased by 90% since 2019, while rents have risen by 23% during the same period. This dynamic shift has contributed to a 1.9% growth in the rental population between the second quarters of 2023 and 2024, setting the stage for meaningful changes in the multifamily housing sector.
PPR Capital Management’s Director of Multifamily Investments, Chris Cordes, recently penned an article for Multifamily & Affordable Housing Business Magazine where he shared three key shifts that are likely to reshape the multifamily and affordable housing markets over the next decade. Let’s explore three emerging trends that are reshaping investment.
- Luxury Apartment Demand Surge: In 2024, Class A multifamily units were absorbed at the highest rate among all unit classes. Over 75% of new units delivered were luxury apartments. This trend reflects demographic shifts, with the average renter now 31 years old and approaching peak earning years (34-56). As renters transition into higher income brackets, they increasingly seek upgraded living environments with premium finishes, tech-integrated features, and sought-after amenities. While planned developments have slowed since the record deliveries of 474,000 and 518,000 units in 2023 and 2024, this segment promises higher lease-up rates and investment returns.
- Build-to-Rent (BTR) Communities Gain Momentum: Shifting lifestyle trends are driving interest in BTR communities. These developments offer greater privacy, more spacious layouts, and features like home offices, dens, garages, and private yards. They’re particularly appealing to renters expanding their families or seeking pet-friendly options. CBRE Research reports a record 80,000 BTR units under construction in 2023. With ongoing barriers to homeownership, including rising mortgage rates and stricter lending criteria, BTR communities provide an attractive alternative to traditional home ownership.
- Rental Market Transformation: Rentership has steadily risen, comprising 34% of U.S. households in 2023. With a 1.9% annual growth rate – three times higher than homeownership – renter households could reach 40% of the market within a decade. This unprecedented shift could mirror rental-dominant models in European countries like Germany (51% renters) and Switzerland (58% renters), driven by heightened housing costs and restrictive lending practices.
If housing affordability remains above the current 31% cost-of-living ratio to overall expenses threshold, these trends will likely accelerate. Government interventions will be crucial. States like Texas, Maryland, Florida, and cities like Philadelphia, are already implementing policies to encourage affordable housing development. Understanding these emerging trends will be essential for developers, investors, and policymakers navigating the complex multifamily and affordable housing markets in the years to come. To read Chris’s full article, click here.
