Experts attribute recent increase in apartment rentals to younger generation

BY KRISTEN EAST | APRIL 02, 2012 6:30 AM

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Across the nation, more people are moving into rental housing and multifamily apartments than ever before, and local and national experts attribute the increase to the younger generation.

According to the real estate services firm CBRE, rentals nationwide increased roughly 5 percent in 2011. Though real-estate agents say young adults are driving the market, several rezoning proposals before the Iowa City City Council would target both student housing and multifamily units.

However, one real-estate expert in California said she hasn't noticed a trend of cities limiting the number of people or bedrooms in a housing unit.

"Everyone needs a place to live," said Melissa Prandi, the president of Prandi Property Management. "What concerns me is that there are probably adults there that also qualify [for the apartments]. If you want to control things, cities generally control the number of cars."

Iowa City city councilors will likely vote Tuesday on the first consideration of an ordinance limiting the number of unrelated persons who can live together in the University Impact Area — a series of zones close to the University of Iowa campus — to a maximum of three. Councilors will also vote to set a public hearing on another amendment that would establish three as the maximum number of bedrooms allowed in a multifamily unit in multifamily zones.

These amendments could affect several city housing developments.

Karen Howard, an associate planner with the Iowa City Planning Department, said three large multifamily/mixed-use buildings are under construction. Three similar buildings are also in design, and several more in the conceptual stage.

One local real-estate agent said renters' location and price often factor into how many residents can affordably live together in a unit.

"It just depends on the individual and what kind of unit they need, and depending on where they want to live as well," said Mike Jensen of Lepic-Kroeger. "Students typically like to live closer [to campus], and all apartment types work for that."

Iowa City planning and community developer Steven Long agreed.

"The focus here is on affordable rental housing," he said. "The market is strong for rental units because of the university and the demand for student housing."

CBRE officials also noticed a recent decrease in vacancy rates. The national vacancy rate for apartments was at 5.2 percent in 2011, with even smaller rates locally. Cook Appraisals LLC found the vacancy rate for apartments within a mile of the Pentacrest was less than 2 percent.

Prandi said this generation of college students will likely continue renting even after they graduate.

"Young people are used to things quickly, rapidly changing," she said. "They'd rather rent a home for one-third of the cost than buy one."

While owning a home was the "American dream" for today's generation of 40- to 50-year-olds, Prandi said, that dream is fading.

"That's not their mindset," she said. "[The younger generation] likes to be mobile, and they're very used to having things in an instant. They'd much rather rent than be tied down to a mortgage."

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