A Harvard University study highlights demographics and trends for the middle-market of rental housing, a sector with about 14 million units that house about 35 million people, or 40 percent of the rental population. The study, conducted by Harvard’s Joint Center for Housing Studies, was underwritten by the National Association of Realtors, the National Multi Housing Council and the Research Institute for Housing America of the Mortgage Bankers Association.
The middle market is defined as having rental prices between the 40th and 80th percentiles of local rent distributions, while the upper market is defined as the upper one-fifth in rental prices.
Demographic projections show that a wave of people will be entering the middle-market for housing in the next 10-20 years, according to the National Multi-Housing Council, and the study is intended as a guide to serve the needs of this market.
“The middle market is remarkably fluid,” said Nicolas P. Retsinas, director of the Joint Center for Housing Studies at Harvard University. “Contrary to the popular belief that almost all new construction is aimed at the top of the market, an equal number of new units are built for the middle market as for the top fifth of the rent distribution.”
Most middle-market units are multi-family structures with two or more units, about 5 million of the rentals are single-family homes, the study found. Additionally, about 75 percent of middle-market multi-unit properties carry mortgages, and ownership changes hands every seven to eight years, on average. More than 4.5 million middle-market households are families with children, and these renters generally favor the single-family home rentals. Renters of single-family units tend to have higher average incomes and higher rents than other middle-market renters.
About 33 percent of middle-market renters have lived in their units for a year or less, compared to 29 percent in the lower-end rental market, according to the study. Commute times for middle-market renters average about 28 minutes. The median income for middle-market households is $30,700, and about 45 percent of middle-market renters are under 35 while about 24 percent are between 35-44.
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