by Brianna Crandall — April 8, 2013—Although approximately 20% of American households live in multifamily rental buildings, until now little was known about how these larger rental properties are financed. The U.S. Department of Housing and Urban Development (HUD) and the U.S. Census Bureau recently released the new 2012 Rental Housing Finance Survey, which provides a more complete picture of the nation’s multifamily rental properties, including data on property values, how their mortgages are financed, and characteristics of the structures.
This new survey builds on previously known information and collects data on property values of residential structures, characteristics of residential structures, rental status and rental value of units within the residential structures, commercial use of space within residential structures, property management status, ownership status, a detailed assessment of mortgage financing, and benefits received from federal, state, local, and nongovernmental programs.
HUD recognized that there was a gap in knowledge about who owns multifamily rental housing (mostly individuals, not large companies, as it turns out), how it is financed, and the financial health of the housing. The nation’s recent housing crisis underscores the need to understand the financing that supports this important segment of the rental housing market, including the performance of the mortgages that support the housing in which one in five American families live.
With this data, HUD can better understand loan origination volumes, property characteristics associated with these originations, and operating cost and revenue characteristics for U.S. multifamily rental properties. The survey will also enable the Federal Housing Finance Agency (FHFA) to set affordable housing goals for the government-sponsored enterprises (GSEs) and to develop standards for underwriting multifamily mortgages. And the rental apartment industry, including property owners, managers and investors, will be able to use the data to benchmark individual project performance against national data to help them make better business decisions.
The 2012 Rental Housing Finance Survey was conducted in the winter and early spring of 2012 by the Census Bureau and includes information from detailed interviews of a nationally representative sample of 2,264 properties. Major findings from the survey include:
- There are 2.3 million such properties in the United States.
- 73% are just one building, while 4% have 20 or more buildings on the property. In properties with 50 or more units, 45% have 20 or more buildings.
- 77% provide parking.
- 19% contain buildings built prior to 1920.
- 67% are owned by households or individuals.
- 70% are managed day-to-day by the owner or an unpaid agent such as a family member.
- 54% of two- to four-unit multifamily rental properties have a mortgage, compared to 85% of properties with over 50 units.
- 73% were acquired by their owners prior to 2005.
- 87% of multifamily properties owners reported making repairs to their housing units; the median cost of repairs was $699 per housing unit in 2011.
- 69% of all multifamily rental property owners reported making capital improvements to their properties in 2010 or 2011; the median cost of capital repairs was $1,167 per housing unit.
