Report: Average Apartment Size Shrinking
Do you feel like apartments are getting smaller and smaller? Unfortunately, you may actually be right. A recent study by RentCafe confirms average apartment sizes are getting smaller, and more expensive, in many major metros around the country. According to the study, the top five cities with the smallest apartments nationwide (ranging from 737 square feet to just 711 square feet on average) are Seattle, WA, Manhattan, NY, Chicago, IL, Washington, DC, and San Francisco, CA.
From 2008 to 2018, the average size of a newly built apartment has shrunk 52 square feet, down 5% to a size of 941 square feet. At the same time, the average rent for a newly-built apartment is up 28% to a rate of $1,944 per month. The size of available apartments will depend on the type of apartment and where you are located. By type, studio apartment units are 10% smaller, down to an average size of 514 square feet, one-bedroom units are 5% smaller, down to an average size of 757 square feet, and two-bedroom units are only 0.5% smaller, down to an average size of 1,138 square feet. While the Northeast and Western states typically have the smallest rental units, the largest units can be found in the Southeast. Regionally, California and the Pacific Northwest experienced the most significant downsizing over the past 10 years, down 12% and 10% respectively.
Some apartment developers explain shrinking apartment sizes having to do with a shift in living habits. Rather than spending time entertaining at home and cooking in a large kitchen, today’s renters prefer to be closer to city centers, and seek entertainment outside of their residence. Affordability is also a factor. From the study, “the rising interest in smaller living spaces is equally motivated by price, as the need to save on rent sparks demand for smaller units.” In especially expensive markets, it’s not uncommon to see “microunits” or dorm-style apartments with shared common areas.
Many renters choose to keep renting because it is perceived as more affordable to homeownership. As apartment sizes shrink and rental rates increase, renters are getting less and less space for their money. The biggest obstacle to buying a home that most renters face is saving for the down payment. With rents likely to continue rising, many renters are unable to set money aside for a down payment even though they could easily afford a mortgage payment. There are over 2,500 down payment assistance programs nationwide designed to help renters overcome this obstacle and become homeowners.
UpItTM by HomeFundItTM is one of the newest down payment savings systems. With UpIt, renters can start saving for a down payment, years before they are ready to buy a home. When an UpIt user shops at participating retails, a percentage of the purchase is pledged toward their down payment savings account. UpIt users can also enlist the support of friends and family to grow their down payment even more. UpIt users do not have to be prequalified for mortgage financing and there is no time limit to use funds raised. To learn more about UpIt click here.
The average rental rate exceeds the average mortgage payment in most metros around the country. Even as mortgage rates rise, and the difference between rental rate and mortgage payments narrows, homeowners still have the advantage of building equity. If you have any questions about renting versus buying in your market, let me know.
Sources: MarketWatch, RentCafe