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History of Multifamily Housing Trends

Multifamily housing has a long history in the United States, and of course, for the native people who lived here long before. From city tenements to the luxury apartments of today, the country has experienced a multitude of multifamily housing trends. These changes offer an important lesson to investors: buildings that do not stay current with changing trends all-to-quickly sink to the bottom of the barrel.

Life Bridge Capital is a leading real estate syndication company. We offer our investment partners the opportunity to leverage shares of multifamily rental properties into a passive monthly income. Learn More.

The First Apartments

The concept for what would become American apartment buildings came from the Paris flats (apartments) occupied by the wealthy and eccentric in 1800s France. Prior to that, Americans lived in tenements —or the fortunate wealthy lived in townhouses and row homes. The Stuyvesant Apartments, built in the 1860s in New York City, became the first middle-class building to house multiple families in separate quarters.

The 5-story building only had 16 units, and the advertised luxuries of private toilets and running waters. 

While apartment living is practically a rite of passage for young adults today, in the 1860s, it was a bizarre and literally foreign concept. The building owners recruited well-known people like Elizabeth Custer, widow of George Custer, as flagship occupants to introduce society to this novel concept.

The population of New York City doubled each decade in the 1800s, making multifamily housing a necessity. Late in the century, builders realized the demand for respectable, middle-class housing for those who could not afford their own homes, especially in dense cities where real estate was at a premium. Multifamily housing was the solution.

Pre-War Apartments

Apartments built prior to World War II certainly stand out from their current counterpoints, and not just for lack of air conditioning. This era demonstrates how multifamily housing trends can vary so much from generation to generation. 

Surviving pre-war apartments feature high-quality construction and unique designs, even among units within the same building. Nine-foot ceilings were the minimum default height, and solid walls provided audio privacy from neighbors.

Units also had unique built-in features, from moldings to metalwork. These types of details stem from cheap labor costs and expensive building materials. Builders worked with materials that would last a long time and sprinkled a little extra effort on top in the form of inexpensive labor and craftworks which created unique, beautiful buildings. 

Post-War Multifamily Housing

We associate the post-war years with a boom in suburban family life due to the GI Bill’s provision for zero-down payment, low-interest home mortgages to returned soldiers.

Residents experienced a time of exceptionally affordable multifamily housing as developers built single-family homes and multifamily properties at an unprecedented rate. Those new apartments advertised the same luxuries as today’s apartments: air conditioning, pools, and walkable locations near everything a resident could want. 

Most postwar properties were three to five-story walk-ups, but luxury buildings offered elevators. There was no Americans with Disabilities Act at the time to accord access to everyone or laws prohibiting discrimination based on race or family status.

Post-war multifamily housing is an example of the housing trickle-down effect whereby housing originally intended for the wealthy becomes affordable housing sometime in the future. Many buildings built in the 1950s are now reserved for the elderly, low-income, or those otherwise in need of subsidized housing. 

Rise of the Modern Apartment: the 1990s

The modern multifamily property, as we most know it today, materialized in the 1990s. Garages, swimming pools, country club atmospheres, and Internet connections all became de rigueur for apartment living for the first time. Of course, things were not identical to today – many multifamily properties offered video rentals!

During the 1990s, the average age of the apartment dweller rose, and the industry saw more people choosing to live in apartments rather than being forced to live in them. Much as today, the amenities became a selling point that lured and retained occupants as apartments provided a standard of living that the average person couldn’t recreate in a single-family home. 

These trends still exist today. In the 2010s, the number of renters surpassed the number of homeowners in over 20 cities. Today’s renters continue to skew older, with major increases in the number of retirement-age people selecting multifamily housing. Despite the 2008 recession and the pandemic, apartment rents grow, and vacancy remains low. Since the early 2000s, rent has grown at a pace that outstripped the average increase in income. To see what the multifamily market trends look like in 2021 see here.

Final Thoughts

By looking at past multifamily trends, today’s investors can glean the importance of staying current with changing tenant demands and preferences. Modern buildings lack the durability and quality craftmanship that characterize older multifamily properties, so they risk stagnation and obsolescence much more rapidly than multifamily properties of the past.

Life Bridge Capital is a leading real estate syndication company. We offer our investment partners the opportunity to leverage shares of multifamily rental properties into a passive monthly income. Learn More.

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