(Bloomberg)—For U.S. apartments, older is also better—at least when it comes to rent growth.
Units at properties built in 1959 or earlier had steeper median rent increases from 2000 to 2016 than those half their age, according to a study by rental website Apartment List. The older buildings are still cheaper, however, with a median rent that’s 23 percent lower than the median for properties built in the 1990s.
Older buildings, usually a reliable source of affordable housing, aren’t meeting that need as many of the properties are taken offline for extensive renovations that result in higher rents when the units return to the market, the study shows. Units from the ’70s and ’80s -- the country’s biggest surge in multifamily construction -- are now prime targets for redevelopment, meaning costs for older units that aren’t updated are likely to climb as renters seek them out for their relative affordability.
“If this happens to the largest cohort of apartments,” said Igor Popov, the website’s chief economist, “then the affordability problem is going to get worse.”
© 2018 Bloomberg L.P