Mar 22

Millennials, boomers fuel apartment construction uptick

Developers are focusing on multi-family residential construction, meeting new demand for rental housing

Sadia and Umair Ahmed would have been the ideal candidates to drift into the American dream of home ownership had they married 30 years ago.

The newlyweds are approaching their mid-20s and are college educated, with well-paying employment in the tech sector. But instead of seeking out the classic two-bedroom starter home, they are starting life together in an upscale apartment in Claymont’s booming The Reserve at Darley Green development.

They are part of a nationwide trend of millennials shunning the anchor and cash commitments of home ownership. It is a thread fueling an uptick in apartment construction in New Castle County that requires further momentum to meet the state’s projected need for rental housing in five years, according to a period assessment of housing needs conducted by the Delaware State Housing Authority.

“We just got married like last year, so we are not financially ready for the down payment on a house and stuff. We just got a car. That is as much as we can afford right now. An apartment was the way to go,” said Sadia, who moved to Delaware from New Jersey largely because of Umair’s job at J.P. Morgan Chase’s technology campus on U.S. 202.

The years since the national foreclosure crisis in 2008 have seen an increase in the number of Delawareans renting housing. About 262,000 residents of the First State rented their home in 2014, up from 209,000 in 2008.

The growth comes as the national home-ownership rate continues to slide, falling for the eight consecutive year in 2014. Sixty-four percent of Americans own a home, according to Harvard University’s Joint Center for Housing Studies. Delaware is better than most states, with 68 percent of its residents owning their homes.

“The apartment industry is very healthy … The average rent increase has been about 4 percent nationally. Delaware is even larger than that. There are factors in our population that indicate that renting is going to continue to be a very strong alternative,” said Paul Chantler, of Sovereign Property Management and head of the Delaware Apartment Association trade group.

Developers here and elsewhere have responded by focusing on multi-family residential construction. Most of the major development projects recently proposed in New Castle County include apartments.

Construction of multi-family units around the country is at a 25-year-high, surpassing the pace set before the recession. With construction of single-family homes still below pre-recession levels, the share of new rental units being built is higher than it has been in 40 years, according to Ralph McLaughlin, chief economist for real estate tracking firm Trulia.

“I’ve been doing this for 30 years; I’ve never seen so much activity for multi-family residences ever,” said local land use attorney Larry Tarabicos, who is working on the redevelopment of the Concord Plaza office complex on U.S. 202 to include more than 200 apartments targeting young people employed by nearby tech firms J.P. Morgan Chase and Incyte. “We have a society that has a greater desire to rent than to own right now.”

Source: Millennials, boomers fuel apartment construction uptick

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