Townhouse Trends

New Competition for Rentals

By Erica Rascón on Mar 17, 2015 in News

National multifamily rents are no longer skyrocketing at breathtaking rates. The news could cause renters to send thank you letters to the powers that be, if they knew who or what those powers were. Primarily, renters can thank a boost in multifamily development which is helping to balance supply and demand. Secondly, they can thank the competition posed by the single-family housing market. A growing demand for townhomes has increased the properties’ market share in sales.

According to REALTOR.org, existing single-family home sales are up by 5.2 percent and distressed property inventory has decreased by 23 percent compared to this time last year. The recent stats demonstrate that homeownership is now more accessible for many, particularly when it comes to existing properties.

New construction is also becoming more accessible. Total single-family attached construction was up 17 percent on a year-over-year basis by the fourth quarter of 2014, census data reports. Townhouses may soon constitute 11 percent of all single-family developments, inching slowly towards the most recent high of 14.6 percent of market shares last seen in early 2008. The total market share of townhouses is expected to continue its gradual rise in years to come.

When looking at market trends, the growth of townhouse sales makes sense. Townhouses offer an ideal compromise between features that both Millennials and Boomers crave in rentals and single-family properties:

-Townhomes fit well into urban environments, where so many Millennials and Boomers have set their sights. Single-family attached properties work well in metropolitan infill lots that are on the smallish side for apartment complexes yet are too profitable for one single-family home.

-Townhouses come with less yard space than a traditional house, minimizing the amount of time and money that owners must dedicate to maintenance.

-Pet owners appreciate that yard space that is available, as it serves as an adequate dog run. The land may also furnish residents with a manageable garden, an option that buyers wouldn’t find in an apartment rental.

– Those seeking the privacy and independence of a single-family home along with the social setting of an apartment get everything that they want in a townhouse. Some townhouse communities also come with shared amenities, which is rare for single-family homes in urban cores.

-Townhomes offer square footage that is appealing to empty nesters, who may be accustomed to spacious single-family living but are looking to downsize. Young couples who are interested growing their families also benefit from the mid-sized accommodations.

The uptick in townhome construction has temporarily helped to counterbalance the rental market, especially in mid-sized markets. Urban cores, however, will need more than new townhome communities before rent rates drop significantly.