Demand for luxury apartments is still strong, but that demand is by choice, not necessity. Tenants in luxury buildings are often renting a second or third home or perhaps downsizing from a larger suburban home. They are not struggling to afford the monthly payments.
"In our portfolio, which represents 70,000 units mostly in the luxury space, we're seeing that our renters are spending a relatively low amount of their income on rent despite rents being perceptively high," said Toby Bozzuto, president and CEO of The Bozzuto Group, a multifamily management and development company operating in the Northeast and Mid-Atlantic. "That being said, it is a tale of two cities. In the middle income and the lower income markets, people are spending proportionally more on their rent — so much so I believe there's an acute crisis headed our way."
Despite rising incomes, nearly half (47 percent) of all renter households (21 million) pay more than 30 percent of their income for housing, including 11 million households paying more than 50 percent of their income for housing, according to a late 2017 report from Harvard's Joint Center for Housing Studies.
"While the market has responded to rental housing needs for higher-income households, there are alarming trends that suggest a growing inability to supply housing that is affordable for middle- and working-class renters, let alone those with very low incomes," said Christopher Herbert, the center's managing director.
Tuesday, February 20, 2018
All we do is build nice things for rich people
The "YIMBY" crowd keep shouting up from behind their Econ 101 coloring books that building nice things for rich people inevitably trickles down the price of housing because the God of SUPPLY AND DEMAND says so. But that's not really how any of this works.