Park Hill Apartments in San Antonio, Texas, is not your typical rental community. To begin with, threequarters of the tenants here are from India.
Renters from the other side of the world have come to Texas to work for USAA Savings Bank, a financial company with offices across the street from Park Hill. They represent just a few drops in the flood of immigrants that is filling apartments in small towns and big cities across the country.
Over the next decade, immigrants will create a boom in the demand for rental housing, experts say. Between 2006 and 2015, the number of renter households is projected to increase by 1.8 million. Minorities, led by Hispanic renters, will be responsible for the entire gain and will eventually account for the majority of renter households, according to the National Multi Housing Council (NMHC).
A rising tide of new Americans
That’s a huge change for the rental housing market. It’s happening because legal and illegal immigration into the United States are now at their highest point since the beginning of the last century, and the tide shows no sign of turning.
The number of people becoming legal permanent U.S. residents has increased every decade since the 1930s, when it hit a low of about 50,000 a year. Between 2001 and 2006, more than 1 million immigrants a year became permanent residents, according to the U.S. Department of Homeland Security.
Many demographic experts thought the government would force the rate of legal immigration down after the terrorist attacks of Sept. 11, 2001—and for three years the annual rate did drop below 1 million. However, the rate rebounded to 1.27 million in 2006, the most recent year on record.
“The reality is there hasn’t been a tapering off of immigration,” said Mark Obrinsky, chief economist for NMHC.
Illegal immigration is also on the rise. In 2005, 10.5 million unauthorized immigrants lived in the United States. That’s up from 8.5 million in 2000, according to the Department of Homeland Security. Undocumented immigrants make up about 30 percent of the 35.7 million foreign-born people living in the United States, according to the Pew Hispanic Center, a nonpartisan research organization.
The promise of employment in the United States has continued to draw both legal and illegal immigrants through several U.S. recessions, and it seems likely to continue despite the current economic slowdown. “The drive to improve your family’s situation is an incredible force,” said Linwood Thompson, managing director of multihousing at Marcus & Millichap Real Estate Investment Services.
Impact for apartments
Immigration has already made a huge difference to the apartment industry, making up for many of the renters who moved out of their apartments as the national rate of homeownership peaked at 69 percent in 2004. Without immigrants, the total number of renter households would have dropped by 2 million since 1994. Instead the number rose by 118,000, staying close to 34 million, according to information from Harvard University’s Joint Center for Housing Studies.
The apartment business is “an industry that would be collapsing without immigrants,” said Manuel Delgado, CEO of Agua Marketing, a consultant specializing in marketing to Hispanics.
Recent immigrants are nearly twice as likely to rent a home as native residents. More than 70 percent of recent immigrants between 25 and 34 years old rent their housing, according to NMHC, compared to about 40 percent of native residents. Older immigrants also are more than twice as likely to rent as native residents.
Smaller cities and towns are rapidly increasing their share of immigrants, and states from Idaho to Arkansas now have growing immigrant populations, experts said. In addition, large numbers of immigrants continue to move to “gateway cities,” like New York City and Chicago.
These cities and towns often benefit from rising property values, according to Albert Saiz, an assistant professor at The Wharton School, the University of Pennsylvania’s business school.
He found that in places where the population increased due to immigration, housing prices increased by the same percentage. So a town with a 1 percent increase in population due to immigrants would also see a 1 percent increase in housing prices.
Immigration has helped create some of the nation’s tightest real estate markets, said Saiz. “You cannot explain prices in New York City without immigration,” he said.
However, despite this trend, price gains often lag in neighborhoods dominated by immigrants compared to non-immigrant neighborhoods nearby, said Saiz. He found that in neighborhoods in which 30 percent of the residents were immigrants, home prices tended to be 6 percent lower than in non-immigrant neigh borhoods.
Marketing for immigrant renters
Apartment managers are coming to embrace immigrant renters, including Latin Americans, who make up more than a third of legal immigrants and three-quarters of illegal immigrants, according to information from Marcus & Millichap and Pew.
“They pay their rent in cash, they pay it on time, and they take care of the properties,” said Marcus & Millichap’s Thompson.
Resource Residential, the Philadelphia-based company that manages Park Hill, works closely with local employers to attract immigrant renters and is hiring staffers who speak the languages of the immigrants.
“Wherever possible, we have at least one bilingual employee per property in the leasing office,” said Harlan Krichman, president of Resource Residential.
Across its 10,000-unit portfolio in 12 states, Resource Residential is also creating Spanish versions of its Web sites and marketing materials to attract Hispanic renters.
Marketing in a language other than English does not violate federal fair housing laws, according to Agua Marketing’s Delgado. Nor does advertising in Spanish obligate landlords to advertise in other foreign languages, he said.
Delgado warns property managers, however, to hire professional writers to create this Spanish-language content, just as they would for their English-language materials. Otherwise, they risk making linguistic missteps that could alienate their target audience.
Immigrants often have different preferences than native renters, said Delgado, so it’s important to study the immigrant groups in your local market. For example, Hispanic renters often value ceramic tile flooring over carpets, while the Indian renters at Park Hill might put a higher premium on carpet, said Krichman.
Immigrants also tend to depend on referrals from friends and family to find their housing. Managers can harness these referrals by informing current residents when apartments are available and offering a referral incentive, said Delgado.
The importance of an immigrant’s social network can also affect the leasing process. For example, Hispanic renters often bring a large group of friends or family when they tour an apartment, so it pays to put a couch in the leasing office, or even a television so that children in the group can watch cartoons while the adults negotiate a lease, said Delgado.
He also recommends that managers allow renters to pay their rent in cash, despite the logistical difficulty of gathering and transporting the money.
In addition, community spaces are important to many immigrant renters. Experts advise managers to provide a comfortable, dignified space like a porch or benches where tenants can gather after returning from work.
Hispanic renters also highly value community spaces where they can hold catered events like Quinceañeras, or coming-of-age celebrations for young Hispanic women, or receptions for weddings and baptisms. These spaces can bring extra rental income to a property—just make sure the space includes a place for a bride to make a grand entrance, said Delgado.