After the housing crisis nearly ten years ago, renters began to migrate to more urban areas, or so it seemed. But a new report from RENTCafe shows that wasn’t quite the case. During a five-year period from 2011 through 2015, researchers analyzed Census ACS data and found that suburban areas were actually outpacing urban areas in renter household gains in 19 out of the 20 largest United States metros. A total of about 700,000 new suburban renter households were added in that time period compared to the 600,000 new urban renter households.
The case is true for Seattle as well. Over that same five-year period, Seattle had more renters flocking to suburban areas than urban ones. During that time, the suburban areas gained 25,500 new renters, a 13 percent increase while urban areas netted 24,400 new renters, only an eight percent increase. While Seattle’s numbers are relatively close, other U.S. markets such as Atlanta, gained three times as many renters in the suburban areas than urban ones. The same is true for St. Louis, Riverside and Boston.
“As crowded urban areas are topping out in occupancy and prices, more renters are choosing the suburban life, with its nicely-landscaped, family-friendly, garden-style apartment communities,” states the report. It added that education and the school systems in the suburban areas are key drivers in pushing more people towards the suburbs. Most notably, however, are the cheaper rents that the suburban areas offer.
After analyzing average rents of the 20 largest U.S. metros using Yardi Matrix, researchers found that in 18 of the 20 metros studied, renting in the suburbs was cheaper than in urban areas, something that renters have long known. On average, renters in the suburbs save the equivalent of one month worth of rent per year compared to urban areas.
In Seattle, renters on average pay about $1,630 in urban areas and $1,456 in the suburbs. But still, Seattle has more renters in the city than it does in the suburbs. Only 41.5 percent of renters are in the suburban areas compared to 58.5 percent in the urban areas. The trend is something the report notes, recognizing that in the majority of the 20 largest metros with the exception of only a few, the urban areas are still where most renters are.
The report found that only two of the 20 metros have built more rentals in suburban areas than in urban areas, Miami and Philadelphia. “During the 2011-2015 time frame, in the 20 metros studied, a total of about 300,000 new apartments were built in urban areas versus approximately 180,000 in suburban areas, according to Yardi Matrix. During this period — which overlaps with the apartment market boom — city apartment construction was up 224 percent, while suburban construction was up 146 percent,” according to the report.
But suburban areas have pros outside of cheaper rents and often better school systems. Typically, these areas provide more variety for renters and have recently been offering higher-end garden-style communities with luxury features usually found in city high-rises.
With researchers suggesting suburban apartment markets are set to be the next big thing for multi-family housing, they expect to see a boost in suburban apartment construction in the coming years.
