Apartments, condos, and even duplexes count as multi-family real estate properties. Why is the interest in these properties booming and interest in owning a single-family dwelling home shrinking? Igor Krivoruchko, a partner with LUXE residential, saw this trend coming and has been investing in multi-family properties, including luxury apartments. And he’s shared the four reasons he believes multi-family housing is so popular.
1. Baby Boomers Downsizing
Many baby boomers find that the value of their home is strong enough that it makes sense to sell it, downsize to an apartment or condo, and use the profit to cushion their retirement. These smaller properties are more affordable and, Krivoruchko argues, therefore, more appealing to baby boomers.
We would add that many of the amenities in apartments and condominiums are well-suited for the elderly. Elevators, group activities, and a lack of landscaping maintenance all make apartment living attractive to those who are concerned about their quality of life as they age. It is also easy to outfit smaller apartments with age-friendly features, like handrails, than larger homes.
2. Millennials Leaving Home
As millennials age, and as their parents downsize, they are now leaving their childhood homes in larger numbers than before. Yet homeownership remains unaffordable for many, so they flock to multi-family developments that can be more affordable.
Why are millennials still unable to afford a single-dwelling home for themselves? More than 80% of people age 22 to 35 cite that their student loan debt is their primary reason they have not yet purchased a home, according to Forbes. For those who cannot get a down payment together due to loans, renting in a multi-family development may be a wiser option.
3. The Strength of Cities
Krivoruchko argues that while some millennials sought out more rural properties for affordability, they no longer wish to move so far away. City living is compelling for many millennials and baby boomers. City living, of course, is high density. With reduced commute and city amenities, it is easy to see why city living would be more popular than suburban or rural areas.
Educated millennials, in particular, are attracted to cities. According to Forbes, in many major American cities, the population growth as compared to metro areas is a few percentage points more, even though they can be less affordable. Major cities such as Chicago, Austin, St. Louis, and Detroit are leading this trend.
4. Desire for Sustainable Housing
Millennials are also more concerned about limiting their environmental impact, and this guides their housing choices. Efficient appliances, low-flow faucets, and composting programs all attract millennials to the multi-family living options in the city.
Not only do new-build apartments and condominiums have features that help millennials keep their environmental impact low, living in the city itself helps. Reduced commute time and public transit options save on gasoline and emissions. Relying on city water and sewer systems can also be more sustainable than rural options of wells and property septic tanks.