Although small multifamily property fundamentals have seen slight improvements – thanks in part to income growth – affordability still remains a concern in most U.S. metros. Yes high levels of variation exist when examining the prices of these locations. This research post from ALEX Chatter takes a deeping dive into the issue of affordability across the U.S.
Housing Affordability Update at the Metro Level
Reflecting the broader macroeconomic recovery, the latest data from the Census Bureau for year-end 2015 indicates a slight improvement in housing affordability for apartment renters.
As highlighted in our recent post, renter households living in small properties (5 to 49 units) allocated, on average, a 39.5% share of their income towards housing costs(gross rents) in 2015 — which was about a percentage point lower than the previous year.
At the same time, housing affordability varies significantly across prominent US metro areas, with renters in the biggest small asset markets, in fact, paying a share higher than the national average.
As shown below, small property renters in the two largest U.S. markets — New York and Souther California (Los Angeles-Riverside-San Bernardino) spend between 42% and 45% of their income on housing. Miami is the least affordable large metro for small asset renters with nearly 46% of household income going towards rent.