Franklin Acevedo knows the importance of the immigrant market to his apartment communities.
The president of Rampart Properties in Los Angeles estimates that as many as 85% of his residents are foreign-born. The strong demand for housing from recent immigrants and a large native-born Latino population have been important stabilizing forces in an often-volatile real estate market, he said.
The significance of the immigrant population to the multifamily housing industry will be even greater in the years ahead.
Between 1994 and 2004, “the number of minority renters rose by nearly 3 million households, offsetting a comparable decline in the number of white renters,” according to America’s Rental Housing: Homes for a Diverse Nation, a new report by Harvard University’s Joint Center for Housing Studies.
Even as homeownership has risen, the number of renter households has held steady at about 34 million over the past decade, primarily because of the arrival of immigrants, the report said. Without this group, apartment owners would have seen the number of renters fall by more than 2 million, or 5%, from 1993 to 2003 instead of rising modestly.
The continued increase of immigration and the growth of young minority households are expected to keep the rental market growing. The Joint Center projects that the number of renter households will increase by more than 1.8 million over the 2005-2015 period. Today, four in 10 renters are minorities, but by 2015 minority households will make up the majority of the nation’s renters.
Two main trends are at work for the multifamily housing industry, said Mark Obrinsky, chief economist and vice president of research at the National Multi Housing Council. The first is the large number of immigrants coming to the United States. During the 1990s, he said, the U.S. immigrant population swelled by more than 9.1 million. So far this decade, immigration has continued at about the same pace.
For apartment owners, there’s a second key factor: Recent immigrants are more likely to rent than buy homes, and that’s true for all age groups, according to Obrinsky.
Reaching new tenants
Census data has shown that immigrant households tend to be larger than native-born ones. In 2003, 25% of family households with a foreign-born householder included five or more people. In contrast, only 12.5% of family households with a native householder were this large.
With that in mind, apartment developers planning for the future may need to look at how an apartment’s space is used. For example, a development might include more three- or four-bedroom units.
What changes individual apartment owners should make, however, will require market testing, industry officials said.
“People are aware of the issue,” Obrinsky said. “They are open to try to figure out ways in which they can better serve immigrant communities.”
Acevedo, whose company owns about 1,000 units in the Los Angeles area, sees the arrival and establishment of immigrants in a neighborhood as one of the first phases of redevelopment. “They are pretty stable and family oriented,” he said.
Rampart has invested in properties in emerging areas of South Los Angeles and East Los Angeles, which have traditionally been “communities of color.” “Our investors know that these communities are recession proof,” Acevedo said, explaining that demand in these neighborhoods, which include a large number of immigrants from Central America and Mexico, is stable enough to weather the ups and downs of the market.
To help potential renters, he has marketing and leasing materials available in Spanish and Korean. Most of his units are market-rate apartments, with about 15% falling within affordable housing guidelines.
According to the 2000 census, more than 36% of Los Angeles County’s population was foreign-born.
The immigrant population is a much smaller factor in other geographic areas of the country. Kushner Cos., a New Jersey-based real estate firm with properties on the East Coast, has its share of immigrant residents from many places, but there hasn’t been a big increase in number or other significant changes recently, according to Alan Hammer, acting chairman of Kushner Cos.
One possible reason his renters’ demographics haven’t changed much may be because his firm operates largely in suburban markets, where there tend to be fewer concentrations of new immigrants.
Hammer reports strong occupancy levels at his communities. Although the emergence of the immigrant population will be important in the future, the overall economy’s health continues to be a key to determining apartment demand, he said. “When the economy is strong, you get a lot of young people as first-time renters,” he said. “When the economy slows, they often go back home or get roommates.