Multifamily Housing Predictions for 2023

Volatile economic conditions are changing critical fundamentals in the housing market. People are increasingly choosing not to buy, even if they have the financial resources, and are instead continuing to rent. With many a potential home buyer feeling the pinch of rising mortgage rates, it is no surprise that home sales have declined significantly and that renting remains the best option for many across the United States.¹

Given these changes in the real estate market, multifamily rental housing owners and managers should continue to evolve the resident experience and ensure that rental home prices align with the community’s amenities and services.² They must meet and surpass the needs of a growing population of individuals and families, many of whom are Gen-Zers and Millennials. Add increasing interest rates and ongoing high single-family home prices, and it’s no surprise that renting remains the best option for many Americans.³

Multifamily Housing Market Conditions and Demographics

Undoubtedly, the biggest housing market prediction is continued home price growth. Across the United States, from major west coast metros like San Francisco and San Diego to New York and even North Carolina, people are struggling with housing affordability issues (e.g., a rising interest rate or mortgage interest rate). According to the Pew Research Center, “more U.S. households are headed by renters today than at any point since at least 1965.”⁴

But this isn’t just because home buyers are being forced out of the housing market through foreclosure, rising mortgage rates, or other financial difficulties. Instead, a significant portion of the falloff is because fewer households are transitioning to homeownership, even when they can afford to buy.⁵

This means more competition for multifamily housing – and communities needing to back up their housing prices with rental home value, the right mixture of in-unit features and on-site services. Given the vast array of value-added services that are available to potential residents on the multifamily housing market, average income as well as ideal resident profile should guide the amenities that property management chooses to invest in.

A multifamily community catering to the elderly will have different needs than a community with many Millennials working from home. Seniors will likely prefer a building with enhanced security amenities, while Millennials and Gen-Zers prefer services that make life more convenient, such as common workspaces or well-equipped gyms.⁶

Residents’ incomes should also guide decision-making. Luxury communities will cater to a very different set of wants than an affordable housing community. Property location is another important consideration. In areas with very little parking, offering a dedicated parking space might be a significant property management incentive idea that will help lease units much faster than in a neighborhood of students who prefer bicycling or using public transport.⁷

2023 Multifamily Housing Market Predictions

Residents’ expectations for the future of apartment living are changing. With Americans holding off on making major economic decisions in a recession-prone environment, apartment renting is forecasted to remain strong going into 2023 as rental prices take a slight dip in markets across the country compared to previous years.⁸ So, how will things evolve in the multifamily housing market in 2023? Here are some insights and multifamily housing market predictions based on current real estate market conditions and resident demographics.

Flexible Workspaces

A recent report from Zumper indicates that pandemic-era multifamily property trends are beginning to unwind, especially in areas that saw a large influx of new residents because of work-from-home policies.⁹ Nevertheless, many people continue to work at home or in a hybrid arrangement.

With this in mind, multifamily property management should consider converting a small room in-unit for an office space or creating coworking areas for residents who want a change in scenery from working alone in the home office. In addition to large tables where people can collaborate on projects, this space might also include a self-service coffee bar.¹⁰

Outdoor Areas

As work from home continues, refurbishing or investing in new or existing outdoor private space (such as balconies or patios) is a big draw for prospective residents. Other popular amenities include communal outdoor spaces such as community gardens, outdoor kitchens, swimming pools, or rooftop patio areas where groups of friends can get together and socialize outside of their rental units.¹¹

In-Unit Smart Tech

Smart thermostats and smart access controls are some of the most requested amenities. Installing smart thermostats lets residents control the temperature in their units from a distance using smartphone technology. It also helps save on utility bills for both residents and property management.¹²

Keyless smart access controls can improve security in units and offer the possibility of including a video intercom link to residents’ smartphones. Keyless entry using PIN-protected keypads can also help secure common shared spaces in the community.¹³

And, with our reliance on digital technology, offering pre-installed Wi-Fi is a bonus for residents looking to quickly get settled in their new space.

Secure Package Delivery

As the popularity of e-commerce continues to grow, managing deliveries is a top-of-mind concern for property managers, owners, and residents. Millennials and Gen-Zers are the generations that shop online the most and they also make up one of the largest groups of apartment residents in the country. Finding effective solutions to deal with the influx of deliveries to multifamily communities is no longer optional.

The average consumer receives 4 to 5 package deliveries a month.¹⁴ Some communities have turned to off-site delivery services; however, these services force residents to waste valuable free time waiting for deliveries to arrive or traveling to pick-up locations. By contrast, package rooms and smart electronic lockers – such as those offered by Parcel Pending by Quadient – offer the kind of convenience that today’s residents now expect. A parcel locker solution not only delivers up to 24/7 access to packages, but also ensures that deliveries are safe and available for pick-up at the resident’s convenience – a win-win for both residents and property management..

Pet Amenities

One consequence of the COVID-19 pandemic was a surge in pet ownership. The pet trend is here to stay and is an important consideration for many residents.¹⁵ Property managers should consider investing in dog parks and pet washing stations to entice pet-owning prospective residents.

Convenience-Based Amenities are Key for 2023 and Beyond

From smart home technology to secure on-site delivery, multifamily communities must deliver more for current and prospective residents in order to justify competitive rental home prices. Recent research conducted by the National Multifamily Housing Council (NMHC) shows that 73% of residents view secure, 24/7 self-serve access to packages as an essential amenity at their property.¹⁶

According to Colleen Lambros, Vice President of Global Marketing at Parcel Pending by Quadient, “the multifamily industry is always innovating and looking for ways to create the best living environment for their residents. Now the challenge is to provide amenities and services that directly integrate with today’s consumers and their elevated expectations.”17

Ready to lock in your property’s package management solution with apartment package lockers? Contact a Parcel Pending by Quadient representative today.

Sources:

1. Duggan, Brian. Top 5 Resident Experience Trends to Know for 2023. www.multifamilyinsiders.com. August 1, 2022. https://www.multifamilyinsiders.com/multifamily-blogs/top-5-resident-experience-trends-to-know-for-2023
2. Ibid.
3. Ibid.
4. Cilluffo, Anthony, A.W. Geiger, et al.. More US Households are renting than at any point in 50 years. www.pewresearch.org. July 19, 2017. https://www.pewresearch.org/fact-tank/2017/07/19/more-u-s-households-are-renting-than-at-any-point-in-50-years/
5. Fry, Richard, Anna Brown. In a Recovering Market, Homeownership Rates Are Down Sharply for Blacks and Young Adults. www.pewresearch.org. December 15, 2016. https://www.pewresearch.org/social-trends/2016/12/15/in-a-recovering-market-homeownership-rates-are-down-sharply-for-blacks-young-adults/#most-renters-would-like-to-buy-a-home-in-the-future-but-many-cite-finances-among-major-reasons-for-currently-renting
6. Gagiuc, Anca. Trending Amenities for 2023. www.multihousingnew.com. November 18, 2022. https://www.multihousingnews.com/trending-amenities-for-2023/
7. Ibid.
8. Zumper. Zumper National Rent Report. www.zumper.com. November 22, 2022. https://www.zumper.com/blog/rental-price-data/
9. Ibid.
10. Gagiuc, Anca. Trending Amenities for 2023. www.multihousingnew.com. November 18, 2022. https://www.multihousingnews.com/trending-amenities-for-2023/
11. Duggan, Brian. Top 5 Resident Experience Trends to Know for 2023. www.multifamilyinsiders.com. August 1, 2022. https://www.multifamilyinsiders.com/multifamily-blogs/top-5-resident-experience-trends-to-know-for-2023
12. Ibid.
13. Gagiuc, Anca. Trending Amenities for 2023. www.multihousingnew.com. November 18, 2022. https://www.multihousingnews.com/trending-amenities-for-2023/
14. Parcel Pending. Off-Site Package Delivery Services: The Challenges of an Analog Solution in Today’s Digital World. www.parcelpending.com. /en-ca/blog/off-site-package-delivery-services-the-challenges-of-an-analog-solution-in-todays-digital-world/
15. Gagiuc, Anca. Trending Amenities for 2023. www.multihousingnew.com. November 18, 2022. https://www.multihousingnews.com/trending-amenities-for-2023/
16. NMHC/Grace Hill. 2022 Renter Preferences Survey Report. www.nmhc.org. January 18, 2022. https://www.nmhc.org/residents
17. Lambros, Colleen. Parcel Pending by Quadient. Rising Consumer Expectations: Creating New Challenges & Opportunities for Multifamily Communities. www.parcelpending.com. October 4, 2019. /en-ca/blog/rising-consumer-expectations-creating-new-challenges-opportunities-for-multifamily-communities/.