National Real Estate Investor magazine and Real Page Inc summarized recent trends in demand for apartments and apartment living. The bottom line is that many demographic and financial shifts are increasing interest in apartment living as a sound lifestyle decision across all types of age groups, regions, and backgrounds.
National home ownership rates peaked in 2004 at 69%, and bottomed out at 63.4% in 2015. In 2018, they are only slightly above that low, at 64.3%.
On the lifestyle side: younger people are preferring to live close to their place of employment and in more active [sometimes more walkable] neighborhoods. Also, people are marrying, having families, and “settling down to the suburbs” later in life, therefore delaying traditional purchases and moves to family homes with yards in the suburbs. The most interesting shift is that renters are increasing across all age ranges, not only in the younger Generation Z.
On the financial side: although the US economy is experiencing excellent full employment levels, housing prices have risen more than wages. That, combined with student and other debt, has made it more difficult for potential homeowners to gather the down payment needed to purchase a home, and for them to have the monthly income to pay monthly PITI mortgage payments. The relative affordability of renting versus buying is attractive for many households.
In 2004-2006, 9% of newly constructed dwelling units were apartments. In 2018-2019, that number has risen to 27% in response to the household preference shifts above. Although this could eventually result in over-supply of higher end / newer apartments [and that is something to be watching for in specific sub-markets], the volume of apartment construction is actually still not keeping pace with the even larger increase in new household formations / population growth.