Data recently released from the 2007 AHS shows that the top three reasons households move into a particular rental apartment in a building with five or more units are:

• Financial reasons (41%)
• The room layout & design (27%)
• They like the size of the unit (21%)

The top three reasons they choose a particular neighborhood are:

• To be close to work (37%)
• To be close to friends or relatives (24%)
• Like the design (16%)

These percentages are based on responses from households that moved into new apartments within the two years prior to the date the survey was conducted. They are based on “check all that apply” type questions, where respondents can indicate all of the features that influenced their choice and the percentages can add to more than 100%.¹ Households that recently moved into buildings with five or more rental apartments are chosen as the group to analyze, in order to exclude smaller “mom-and-pop” operations in favor of the larger (and more likely to be professionally managed) buildings that are likely to be of interest to readers of Multifamily Market Outlook. 

Trends

The AHS has now been conducted in a relatively consistent manner for a full decade (the survey switched to computer-assisted telephone interviews in 1997), making this a convenient time to look for trends in the data. One apparent trend is that the top reasons renters choose five-plus apartments in a particular location are becoming even more important over time. 

Between 1997 and 2007, the share of five-plus renters who chose their neighborhoods to be near work increased steadily from 31 to 37% in 2007. Over the same period, the share who chose their neighborhoods to be near friends or family increased from 20 to 24% (Figure 1). 

In contrast, the share of five-plus renters reporting that they chose neighborhoods because of neighborhood design or the housing unit itself have been on the decline (Figure 2).

Meanwhile, the top reasons for choosing a particular five-plus rental unit have been fairly stable over the 1997-2007 decade. Financial reasons, room layout, and unit size have remained the top three attractions—in that order. Although there has been some fluctuation in the percentages over the years, this is only natural given the inherent statistical errors, and the year-to-year changes show no persistent trend.

On the other hand, relatively persistent trends are apparent in some the lesser reasons for choosing a particular five-plus rental apartment. Exterior appearance has declined quite steadily as a reason for choosing five-plus apartments, from 10.4% in 1997 to 7.2 % in 2007. Similarly, the share of five-plus renters reporting that they chose their apartments because of the view declined from 8.1% in 1997 to 6.6% in 2007 (Figure 3). This seems consistent with the trend toward fewer renters selecting a particular neighborhood because of its design. All three of these “external appearance” measures seem to have become less important to five-plus renters since 1997. 

The AHS also asks recent movers some questions about how they shopped for their housing unit.  Most movers into five-plus rental units report that they look only at multifamily housing before deciding on a particular apartment. Only about one-fifth report looking at both single family and multifamily units when shopping for housing, and this percentage has remained constant over time.  Among those who look only at multifamily units, however, more are looking at only one rental apartment before making a choice. Between 1997 and 2007, the share of movers into five-plus rental units who report that they looked only at the apartment they eventually moved into increased from about 8 to roughly 18% (Figure 4).

Comparison to Other Housing Types

The reasons five-plus renters give for choosing housing units and neighborhoods differ substantially from the reasons given by those who move into other types of housing. Although the top three reasons single family home buyers choose a housing unit are the same as for five-plus renters, the order is quite different. Room layout and design is the attraction single family buyers cite most often, and by a wide margin.

There is also a marked difference in terms of the tendency to be influenced by exterior appearance of the building and the view. These two features are much more often cited as influential by single family buyers than by movers into five-plus rental units. Multifamily condo buyers and movers into 1-4 rental units fall somewhere in between the two extremes (Figure 5).

Reasons for choosing a neighborhood show even more marked differences. Among single family buyers, the top reasons for choosing a particular neighborhood are neighborhood design and the housing unit it self. A location near various trip destinations is given as a reason much less often, especially compared to those who move into five-plus rental units.

Differences in locational preferences extend to locations near public transportation or other public services.² Although fewer than 10%, irrespective of housing type, choose a location for one of both of these reasons, the percentages are particularly low among single family home buyers.8.5% may not seem like a large share of new tenants in five-plus apartments choosing a location to be near public transportation, but it’s much higher than the 3.2 % of single family home buyers (Figure 6). The breakdown appears to be more related to structure type than owner-renter status. The percentages of multifamily condo buyers who want to be close to public transportation and services are about the same as they are for five-plus renters.

Conclusion

Like people moving into any type of housing, those moving into five-plus rental apartments tend to want every possible amenity at the lowest possible cost. All amenities are usually not attainable at an affordable rent, however, so the choice of a particular apartment and location tends to involve various trade-offs. Knowing what motivates these decisions is important to builders planning new multifamily projects, and to property owners marketing existing ones.

The most recent AHS data has shown that five-plus renters are most often motivated by a desire to be near things—particularly work, family, and friends. Moreover, they seem increasingly willing to give up view and exterior appearance to attain these key proximities. 

Compared to those moving into other types of housing, new tenants in five-plus apartments remain more likely to choose a neighborhood because it’s near public transportation. However, the share of home shoppers motivated by a public transportation remains low enough overall to be discouraging to proponents of transit-oriented development. On the other hand, the strong and increasing tendency tenants moving into five-plus structures show to choose a location specifically because it’s near their places of work seems favorable to mixed-use development—and indicates that larger apartment buildings have a considerable role to play in this type of community.