Supersize Apartments Are Back in Demand

Apartment sizes are getting bigger across the U.S., just as more people are looking for additional space while spending more time working from home.

In 36% of U.S. cities, apartments under construction are larger on average than those built over the previous five years, according to a report from RENTCafé, a nationwide apartment-search website. Units in 33 of the 92 cities studied rose nearly 50 square feet on average, the report said.

The demand for larger units follows several years when apartments were shrinking in size, in part because smaller units are more profitable for property owners. In dense urban areas and around universities, many developers continue to build smaller apartments to offer more of them and meet high rental demand, according to Yardi Matrix, a real-estate market-intelligence firm that provided data for the RENTCafé report.

But the percentage of bigger new apartments is the highest it has been in five years, reflecting recent tenant preferences, said Doug Ressler, Yardi Matrix’s manager of business intelligence. Older millennials have reached the typical homebuying age, but many are unable to find a home they can afford. Instead, they are looking to rent larger apartments for themselves and their families, Mr. Ressler said.

While the urge to upsize apartments predated the Covid-19 pandemic, some real-estate executives suggest it will continue as the health crisis puts a new premium on space. Developers say they are building units that offer more space to work and relax in, as a way to accommodate residents who are moving out of high-density cities and into suburban areas across the country.

“We’re doing little things like adding built-in offices and areas where people can work from home in nooks and crannies,” said Michael Van Der Poel, founding partner of Asia Capital Real Estate, a private-equity firm that specializes in multifamily-housing development and investment.

J. David Heller, chief executive of the NRP Group, a developer of multifamily buildings, said his firm is offering a den that can be used as a home office in both its one- and two-bedroom apartment plans.

NRP, which develops communities in St. Petersburg, Fla., and San Antonio, among other cities, has expanded a number of its floor plans by 30 to 50 square feet, Mr. Heller said.

Some multifamily developers in northern New Jersey are taking a similar approach, replacing one-bedroom apartments with one-bedrooms plus a den, said Brian Gretkowski, president of Sparrow Asset Management.

The extra space that U.S. developers are offering is incremental, but “in a 600-square-foot apartment, 50 square feet adds up,” said Justin Brown, president and CEO of Skender, a Chicago-based construction firm.

RENTCafé’s report, which it released in early June, analyzed apartment data in the 92 U.S. cities where floor-plan-size information was available as of last month for projects under construction.

One-, two- and three-bedroom apartments are increasing in size in almost half of the cities RENTCafé analyzed. Those units are adding to their average size 28 square feet, 39 square feet and 105 square feet, respectively, according to the report.

Everett, Wash., is leading the trend. Developers there are building apartments to be 267 square feet larger than those built in the past five years, the report said. Other leaders include Kirkland, Wash., with 211 additional square feet, followed by Scottsdale, Ariz., with 208 more square feet, on average.

The report didn’t address whether the shift to add space will affect rent prices. Not all developers are convinced the trend will stick, citing affordability challenges.

“We’re unsure if long term, average unit sizes will increase because that would ultimately mean higher rents,” said Omar Rihani, head of multifamily development at Project Management Advisors.

Former President Donald Trump said he would ban undocumented immigrants from obtaining home mortgages, a move he indicated would help ease home prices even though these buyers account for a tiny fraction of U.S. home sales.

Home loans to undocumented people living in the U.S. are legal but they aren’t especially common. Between 5,000 and 6,000 mortgages of this kind were issued last year, according to estimates from researchers at the Urban Institute in Washington.

Overall, lenders issued more than 3.4 million mortgages to all home purchasers in 2023, federal government data show.

Trump, the Republican presidential nominee, made his comments Thursday during a policy speech to the Economic Club of New York in Manhattan.

Housing remains a top economic issue for voters during this presidential election. Rent and home prices grew at historic rates during the pandemic and mortgage rates climbed to levels not seen in more than two decades. A July Wall Street Journal poll showed that voters rank housing as their second-biggest inflation concern after groceries.

Both major candidates for the 2024 presidential election have made appeals to voters on housing during recent campaign stops, though the issue has so far featured more prominently in Vice President Kamala Harris ’s campaign.

Trump has blamed immigrants for many of the nation’s woes, including crime and unemployment. Now, he is pointing to immigrants as a cause of the nation’s housing-affordability crisis. Yet some affordable-housing advocates and real-estate professionals said Trump’s mortgage proposal would fail to bring relief to priced-out home buyers.

“It’s unfortunate that given the significant housing affordability crisis that is widely acknowledged across most partisan lines, we are arguing about a minuscule segment of the market,” said David Dworkin, president of the National Housing Conference, an affordable-housing advocacy group.

Gary Acosta, chief executive of the National Association of Hispanic Real Estate Professionals, a trade organization, said, “It’s just another effort to vilify immigrants and to continue to scapegoat them for any issues that we have here in the United States.”

A Trump campaign spokeswoman didn’t immediately respond to a request for comment.

Undocumented immigrants in the U.S. can obtain an obscure type of mortgage designed for taxpayers without Social Security numbers, most of whom are Hispanic. The passage of the USA Patriot Act of 2001 allowed banks to use identification numbers from the Internal Revenue Service as an alternative to Social Security, extending a number of financial services to people without legal status for the first time.

Mortgage loans for undocumented immigrants are typically higher interest and borrowers include legal residents who have undocumented spouses, Acosta said. Lenders include regional credit unions and community-development financial institutions.

In his speech, Trump said that “the flood” of undocumented immigrants is driving up housing costs. “That’s why my plan will ban mortgages for illegal aliens,” he said.

Trump didn’t elaborate on how he would enact a ban on such loans.

Though mortgages for undocumented people living in the U.S. are relatively rare, residential real-estate purchases by foreign nationals are big business , especially in expensive coastal cities such as New York and Los Angeles. These sales have declined in recent years, however.

Close to half of foreign purchases are made by people residing abroad, while the other half are made by recent immigrants or residents on nonimmigrant visas, according to an annual survey by the National Association of Realtors. Many affluent foreigners buy U.S. homes with cash instead of obtaining mortgage financing.

In his Thursday speech, which focused mostly on other economic matters such as energy and taxation, Trump proposed other measures to bring down housing costs, including cutting regulations for builders and allowing more building on federal land. Similar ideas appeared in the housing policy outline Harris released in August .

The former president has spoken on housing-related issues in speeches at other recent campaign stops, including in Michigan last month, where he touted his administration’s 2020 overturn of a policy that had encouraged cities to reduce racial segregation .

“I keep the suburbs safe,” Trump said. “I stopped low-income towers from rising right alongside of their house. And I’m keeping the illegal aliens away from the suburbs.”

Supersize Apartments Are Back in Demand

Developers across U.S. try to meet millennials’ needs and accommodate the shift to remote work.

The Republican nominee says it would help bring down home prices, though these buyers account for a fraction of U.S. home sales