RENTAL HOUSING DEFINED

There are two definitions of rental housing one by type of structure, and the second one by type of tenure. By type of structure rental housing is any structure with two or more units. In this report we are using this definition in tables showing past experience in housing construction (see Table I) and in projections for the decade 1960-1970 (see Table IX). This approach is the same one used by the Department of Commerce, Bureau of Census Division in reporting on housing starts.

By type of tenure we refer to units occupied either by home owner or by renter. This definition is used throughout the study where we refer to home owner and renteroccupied housing units, and also in our projections for the decade 1960-1960 (see Table XI). This approach is used by the Bureau of the Census in their decennial census enumerations.

This dual definition is necessary because quite a few onefamily houses which find the way on the rental market. According to the 1960 Census, over 9 million one-family dwellings were renter-occupied. Therefore, we must make this distinction between rental houses by structure and by

tenure.

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PART I- DIMENSIONS OF THE BOOM

BIGGEST YEAR FOR RENTAL UNITS

1962: In 1962 we reached a new all-time record in the construction of rental housing. Out of 1,429,000 total private non-farm housing units started nearly 32% were rentals a total of 426,000 multifamily units. This was a gain of 36% over 1961.

According to NAHB's revised estimates of postwar starts, the low point for rental housing construction occurred in 1956, with a total of 129,000 rental type starts. As a percent of the total, the low point was 1955, when rental units comprised a little over 8% of total private non-farm starts.

Looking back historically to the 20s, the previous record year for rental housing starts was 1925, when 365,000 units were started. As a percent of the total, 1927 was the record year with an estimated 44% of starts in rental units but it is probable that the percentage' figures for prewar starts are inflated by apparent underestimates of 1-family starts.

Table I

NON-FARM HOUSING STARTS, BY SALES AND RENTAL-TYPE UNITS--OLD AND NEW SERIES1/

(Thousands of Units)

OLD SERIES2/

Total Non-Farm

Year

Starts Type Rental

Year

Year

1/ Old Series data from HHFA 14th Annual Report (based on data originally compiled by BLS and other sources); New Series are NAHB estimates for 1946-58, and are official census data thereafter.

2/ Old Series data is believed to substantially underestimate the actual volume of starts, with most of underestimate affecting 1-family sale type homes. NAHB series corrects for this, but Old Series bias may suggest a higher percentage of rental units than was true. Also note that New Series table excludes public housing.

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24-155 O-63-17

RENTAL HOUSING A DOMINANT CHARACTERISTIC OF LARGE CITIES Six major metropolitan areas tend to account for roughly half of new rental housing construction. The size of the cities, and the transportation problems of a community of great size tend to increase the demand for more compact, higher density housing. Also, large cities are traditionally a focal point of population mobility. This plus the fact that apartment units are generally infrequently offered for sale, make the big cities primarily rental markets.

The cities also are characteristically sought out by a large proportion of our young people seeking to enter the job market. These young people are in the early stages of the life cycle unmarried, or couples without children and with low incomes and a low accumulation of financial assets - and these factors make them a prime market for both small housing units and rentals. It is now a matter of record that the central cities in four of these six metropolitan areas actually lost population from 1950 to 1960 but at the same time all six had significant gains in number of households. This was an obvious indication that families with children were moving out to the suburbs, while one and two person households not only took their place, but added to the demand in terms of number of housing units.

...

RENTAL HOUSING BOOM PERVADES ALL AREAS The fact that half of the rental housing is built in these six city areas may tend to conceal the fact that the rental housing boom is pervading nearly all areas. NAHB Special Report 63-4 dated June 5, 1963, provides data on 42 metropolitan areas and it should be noted that rental housing permits increased from 1961 to 1962 in 34 areas while declining in only 7. Some areas reached an earlier peak in rental housing construction, but nonetheless participated in the boom, by comparison to their experience in the mid-fifties. Only 14 of the 42 areas failed to reach a 30% rental mix in at least one of the three years 19601962; and only 9 failed to reach 25%.

...

OWNER OCCUPANCY TRENDS In historical perspective, the current rate of home ownership is a record high. It should be noted particularly that while the home ownership rate from 1890 to 1940 remained at a fairly consistent level, the rates for 1950 and 1960 each represented substantial increases in the rate.

* - Home ownership rates are percentages of occupied dwellings.

Not available.

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