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By type of tenure that is whether owned or rented
additional units are about evenly divided

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the demand for renting will be about the same as the demand for owning.

The methodology of the study, as well as the conclusions, are set forth in some greater detail in a separate supplement which may be obtained on request. This supplement was prepared for the professional market researcher, as well as for others whose interest in the subject is such that they do wish to know the assumptions and facts on which the above conclusions were based. But this detail would also be worth study by the operating businessman providing valuable clues to the nature of his future markets. These conclusions are the result of some considerable probing into the background of our future housing markets and should provide much food for thought for everybody connected with the home building business.

MAR

Nathaniel H. Rogg
Director

Economics and Policy/Planning

RENTAL HOUSING DEFINED

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one by type By

There are two definitions of rental housing of structure, and the second one by type of tenure. type of structure rental housing is any structure with two or more units. In this report we are using this definition in tables showing past experience in housing construction (see Table I) and in projections for the decade 1960-1970 (see Table IX). This approach is the same one used by the Department of Commerce, Bureau of Census Division in reporting on housing starts.

By type of tenure we refer to units occupied either by home owner or by renter. This definition is used throughout the study where we refer to home owner and renteroccupied housing units, and also in our projections for the decade 1960-1960 (see Table XI). This approach is used by the Bureau of the Census in their decennial census enumerations.

This dual definition is necessary because quite a few onefamily houses which find the way on the rental market. According to the 1960 Census, over 9 million one-family dwellings were renter-occupied. Therefore, we must make this distinction between rental houses by structure and by tenure.

vii

1962:

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BIGGEST YEAR FOR RENTAL UNITS ... In 1962 we reached a new all-time record in the construction of rental housing. Out of 1,429,000 total private non-farm housing units started nearly 32% were rentals a total of 426,000 multifamily units. This was a gain of 36% over 1961.

According to NAHB's revised estimates of postwar starts, the low point for rental housing construction occurred in 1956, with a total of 129,000 rental type starts. As a percent of the total, the low point was 1955, when rental units comprised a little over 8% of total private non-farm starts.

Looking back historically to the 20s, the previous record year for rental housing starts was 1925, when 365,000 units were started. As a percent of the total, 1927 was the record year with an estimated 44% of starts in rental units but it is probable that the percentage' figures for prewar starts are inflated by apparent underestimates of 1-family starts.

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Total Non-Farm

Table I

NON-FARM HOUSING STARTS, BY SALES AND RENTAL-TYPE UNITS--OLD AND NEW SERIES1/

OLD SERIES2/

(Thousands of Units)

OLD SERIES2/

Total Non-Farm

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NEW SERIES
Private Non-Farm
Total Rental %
Starts Туре
Rental

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1/ Old Series data from HHFA 14th Annual Report (based on data originally compiled by BLS and other sources); New Series are NAHB estimates for 1946-58, and are official census data thereafter.

2/ Old Series data is believed to substantially underestimate the actual volume of starts, with most of underestimate affecting 1-family sale type homes. NAHB series corrects for this, but Old Series bias may suggest a higher percentage of rental units than was true. Also note that New Series table excludes public housing.

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24-155 O 63 - 17

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RENTAL HOUSING A DOMINANT CHARACTERISTIC OF LARGE CITIES Six major metropolitan areas tend to account for roughly half of new rental housing construction. The size of the cities, and the transportation problems of a community of great size tend to increase the demand for more compact, higher density housing. Also, large cities are traditionally a focal point of population mobility. This plus the fact that apartment units are generally infrequently offered for sale, make the big cities primarily rental markets.

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The cities also are characteristically sought out by a large proportion of our young people seeking to enter the job market. These young people are in the early stages of the life cycle unmarried, or couples without children and with low incomes and a low accumulation of financial assets and these factors make them a prime market for both small housing units and rentals. It is now a matter of record that the central cities in four of these six metropolitan areas actually lost population from 1950 to 1960 but at the same time all six had significant gains in number of households. This was an obvious indication that families with children were moving out to the suburbs, while one and two person households not only took their place, but added to the demand in terms of number of housing units.

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