The coronavirus pandemic changed a lot of people's housing situations. Many city dwellers fled crowded urban areas last year in favor of suburban homes with far more square footage. And now, it looks like some of the renter preferences that emerged in 2020 may be here to stay.
Budget and space come first
Zillow's Consumer Housing Trends Report 2021 reveals that renters today aren't so hung up on amenities like pet areas, gyms, and other shared spaces. Instead, finding a place to live that falls within their budget is extremely important to renters. Furthermore, having the right amount of space and their preferred number of bedrooms is high on renters' lists.
Last year, many shared apartment building amenities were off-limits to tenants when the coronavirus outbreak initially broke. And that may have left a bad taste in tenants' mouths. After all, it's not uncommon to pay a premium to live in a building with a playroom or gym. So now, tenants may be used to living without those perks -- and unwilling to pay higher prices to get them.
That's something real estate investors should be aware of as the demand for rental units continues to soar. For much of the pandemic, renters have put their lease-signing plans on hold due to factors like unemployment and economic uncertainty. But at this point, the U.S. economy has largely improved, and many jobs have been recovered. Renters may now be more eager to secure leases -- but they're likely to be more budget-conscious in the process.
Let's not forget that many renters fell behind on their housing payments during the pandemic when they were hit with job loss or other unplanned costs. Now, renters may be looking to spend as conservatively as possible. And if that means giving up bells and whistles in favor of more affordable housing, so be it.
Also, though some companies are finally making plans to bring workers back to office buildings, many people will be working remotely on a longer-term basis. As such, it's easy to see why renters today are putting more emphasis on square footage and the number of available bedrooms in a given unit than the amenities the building that houses it might offer.
Furthermore, though some companies won't allow full-time remote work to continue once it's safer to return to offices, many employers are likely to uphold hybrid models that have employees doing their jobs from home at least one or two days a week. So either way, it's clear that renters today will need to ensure that they have adequate space to get their jobs done.
An important heads up for investors
It's common practice for investors in multifamily real estate to focus on buildings that offer attractive perks. But in the near term, real estate investors may instead want to focus on affordable properties that are easy to maintain so they can pass as much savings as possible on to renters. Similarly, focusing on buildings with larger units could work to investors' advantage.
In time, renters may come to favor amenities like having a gym or swimming pool onsite. But right now, budget and space seem to trump all.