The Apartment Arms Race
Popping up in cities across Ohio are luxury apartments one after another. They’re lavish tall buildings with amenities ranging from rooftop pools to workout facilities with a nice view. Although the price point is higher than most apartments prior to the recent boom we’re seeing, residents are still flocking from the suburbs to the city to take in the luxury lifestyle that comes with a luxury home. No grass to cut, no yard work to be done and certainly less space to clean up after a night of hosting guests.
Some argue this boom isn’t sustainable in all cities where residents aren’t interested in luxury apartments or simply content with living in the suburbs. In Ohio’s major cities, it has become common to find a new luxury development breaking ground each month. Are cities becoming over developed or is there a big enough market to keep these luxury buildings filled with new residents? Let’s find out!
Demand: Choice Not Necessity
The flow of demand for these apartments is typically out of choice and not necessity. These residents are choosing a luxury living arrangement as a want rather than a dire need when taking into consideration the less expensive options. Those who are purchasing homes in these buildings have the funds to do so. We’re seeing a lot of push from families and couples looking to downsize later in life from their big suburban home to a quaint nook in their city. A lot of developers have begun building in revitalized parts of the city- think about Over the Rhine, The Short North and The Flats. This revitalization has created new opportunities for residents to move to the urban spot they’ve always wanted to live in by attracting more developers. Residents in luxury apartments can afford to pay the premium price because they’re downsizing in space instead of finances.
With incomes on the rise, more young professionals are able to make a larger real estate investment in their first homes near their work place downtown. The question remains: is it worth it when you no longer have to Uber into the city or fill up your car with gas every week?
The Downside: Affordable Housing
On the contrary, some are wondering what happens to those residents who are middle and working class. These homeowners often rely on affordable housing, which is becoming more and more bleak with rising apartment costs and increased competition. The rent for buildings has become higher due to basic supply and demand fundamentals. With more people moving to luxury apartments, the demand for affordable housing decreases slightly making the supply that needs to be filled much larger. This forces prices for what is now affordable pricing to start to tick upwards.
The affordable complexes in suburban neighborhoods are competing heavily for the middle and working class’ residency forcing them to provide heightened amenities to tenants. After all is said and done, there will always be a demand for affordable housing but it’s up to developers to find a way to keep their prices low while retaining residents with their 5 star amenities. For now, we are riding out the luxury trend that you can expect to keep rising.
The temporary solution is that apartment owners and developers are now turning down new affordable projects and instead rehabbing their older complexes to stay in competition. By elevating the experience at these complexes while keeping affordable pricing, those who need it most are able to live a slightly elevated complex without sacrificing 30% of their income. This solution may hinder some resident’s decision to make the move to a more expensive luxury apartment.
Government programs are available in some cases to help developers create new affordable housing for lower income residents. However, these programs do not provide all of the appropriate funding and resources to get the restoration job done as of right now.
In other news, there is still a desire for some urban homeowners to move to the suburbs as they grow in age leaving room for the young professionals and aspiring city slickers to move into their urban spot. Although this apartment arms race has been a big shift in the housing market, its a chance for some homeowners to make the move they’ve always dreamed of making.