The number of single-family homes available for rent increased by 32% between 2006 and 2013, according to CoreLogic, a provider of consumer and property data. At the same time, the supply of apartments in many markets has tightened. Nationally, the vacancy rate was 4.4% at the end of 2015, according to Reis, a provider of market data.
"Our customers who are in their mid to upper 20s mostly want apartments," says Jonathan Eppers, CEO of RadPad in Los Angeles, a rental listing and payment site. "We find that people searching for a single-family home rental tend to be in their 30s and married or getting married and are thinking about starting a family."
Research by Fannie Mae shows that in 2013, 52.4% of renters ages 25 to 34 lived in single-family homes, compared with 43.4% in apartments.
What renters want
RadPad's recent research into what their mostly millennial users want shows that the most searched-for amenity is parking, followed by a washer and dryer in the dwelling or on site.
Apartment pros / single-family home cons
The apartment or home decision always depends on individual preferences, but Brandon Brittingham, regional manager for Long & Foster Real Estate in Salisbury, Maryland, says he finds younger renters and retirees prefer an apartment so they can avoid maintenance chores. Apartments typically offer renters more amenities than single-family homes.
One big amenity that apartments offer more often than single-family homes is a location within a city or in a close-in suburb, offering a walkable lifestyle that appeals to both young renters and empty nesters.
"Renters want a convenient lifestyle near coffee bars, restaurants and public transportation," Eppers says. "That's easier to find in an apartment in a city than in a suburban single family home.
"Anecdotally, we find that apartment renters value convenience and flexibility above all and are willing to pay more money to be in a smaller unit in the right neighborhood rather than to have more space in a less desirable neighborhood," Eppers says.
Both apartments and single-family homes can have professional management, which provides easy maintenance for renters, but some individually owned homes have less-experienced landlords who can be tougher to reach, says Aaron Marshall, CEO of Keyrenter Property Management in Salt Lake City and Midvale, Utah.
Single-family home pros / apartment cons
The Urban Land Institute asked 259 millennials why they chose to rent single-family homes. Their top reasons:
45% cite "more privacy."
41% say they like having a backyard.
31% say they get more interior space for the money.
Another 31% value the extra storage space.
25% like having a garage.
"The biggest amenity a single-family home offers is privacy," says Brittingham. "Most of the renters we work with decide that as long as the rent is comparable they'll choose a single-family home because they can get more space and a bigger yard, which is especially important if they have kids."
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Brittingham also says people like not having neighbors directly above or below them.
"People like to stay in a single-family home longer because they have fewer issues with noise from their neighbors or their neighbors' dogs," says Marshall. "You also don't have to deal with smokers in the adjacent apartment or outside your window."
Marshall says rents tend to increase more slowly for single-family homes than they do for apartments.
"Apartments have a higher cost-per-square-foot in some locations, too," Brittingham says.
Marshall says that in his area you can often get a garage, a yard and an extra bedroom and bath in a single-family home compared with a similarly priced apartment.
Parking, the No. 1 priority of renters, according to RadPad, is typically available either on the street or in a driveway or garage with single-family homes, but not all apartment buildings offer a parking space, Marshall says.
Whether you prefer an apartment or a single-family home, make sure you know the rules about pets and who pays the utilities before you sign a lease. Rules vary from one rental to another. Once you've done a price comparison based on this information, you can rely on your personal preference for privacy or communal living.
Resource: http://www.bankrate.com/finance/real-estate/single-family-home-vs-apartment-rental.aspx
