NORMAN — Demographic shifts in Oklahoma’s multi-family housing market means communities, business owners and developers are reconceptualizing multi-family housing and its economic and social impact.
But even with changing trends, homeowners often fear that apartments and other multi-family dwellings will negatively affect single-family home values. A 2005 study by the Massachusetts Institute of Technology’s Center for Real Estate found no negative or positive impact on single-residence homes.
The study was designed to objectively measure the effect in reponse to this question: Do mixed-income, high-density rental developments negatively impact nearby single-family property values?
According to the report, “This question has been at the core of the controversies surrounding mixed-income housing in suburban Boston communities.”
The report found that “the results in all seven case study towns lead us to conclude that the introduction of large-scale, high-density, mixed-income rental developments in single-family neighborhoods does not affect the value of surrounding homes. The fear of potential asset-value loss among suburban homeowners is misplaced.”
While findings in Massachusetts may or may not be applicable in Oklahoma, the question has a familiar ring.
Meanwhile, certain factors are cited by local developers as driving a shift in demographic trends. Namely, loan requirements are more stringent because of the collapse of easy-credit days, and many busy professionals no longer want the stress of yard and home maintenance.
How does this shake out in Norman?
Mike L. Buhl, a broker with Commercial Realty Recources Co., reported on sales he’s brokered in Norman and discussed emerging trends in the 2011 Apartment Report recently released by CRRC.
Buhl said there is an “increasing sense of optimism in the multi-family industry.”
“Sales activity was on the rise in 2011, while occupancy and rental rates showed modest improvement,” he said.
The demographic shift includes a variety of age ranges, but the bulk of the market is driven by emerging professionals.
“They’re young professionals, people in their mid-20s to mid-30s, the echo boom generation, and they represent a huge demographic wave for the apartment industry,” Buhl said.
Echo boomers are the largest generation of young people since the ’60s and they are beginning to come of age. The “echo boomers” are so named because they’re the genetic offspring and demographic echo of their parents, the baby boomers.
“Most importantly, they represent potential renters, and their numbers are growing,” Buhl said.
According to Advertising-Age, the percentage of Oklahoma millennials, or people age 25 to 34, rose by 12.2 percent from 2000 to 2010.
“Oklahoma ranks fifth in the nation for increases in that key demographic, which is a predictor of economic growth,” he said. “When you look at the growing millennial population, you start to see the correlation between this key demographic and new multi-family construction.
“And these new construction projects are strategically located in areas where the millennial populations are growing most.”
Development trends on the northwest side of Norman are in line with those trends, with multi-family proposals keying to communters who work within the broader metroplex area, including Moore and Oklahoma City.
Initial proposals that have come before Norman City Council include amenities geared to this population, including fitness centers, running and walking trails and other amenities that differ somewhat from amenities offered in student housing complexes.
These multi-family housing units appeal to many older professionals, as well.
“There are a lot of demographic shifts taking place that will favor the apartment industry, and I think we will see these really start to take hold as we move into 2012,” Buhl said.
Another factor in the market
Another dynamic driving multi-family housing is the increasing number of people in lower income groups who can no longer afford housing, but that doesn’t have to mean a negative impact, Buhl said.
Artisan Ridge Apartments in Oklahoma City is taking steps to help residents “while creating greater asset value and higher occupancy,” he said.
Net rental income increased a year after the property started accepting Housing Vouchers, and the owners said it has been worth it.
“The property offers a great location and superb amenities for its residents, along with after-school programs for its youth that are sponsored by a local church,” Buhl said. “Artisan Ridge is improving the lifestyle of its residents while creating greater asset value. The troubling statistic is that the number of Oklahomans receiving food stamps has reached an all-time high for the seventh consecutive month, according to the Oklahoma Department of Human Services.
“According to figures released by the Oklahoma Department of Human Services, more than 625,000 Oklahomans received subsidies through the Supplemental Nutrition Assistance Program in September.”
Proactively providing quality solutions to the housing problem can benefit the community as a whole, but Buhl said good management strategies are the key to success in this area.
Despite these discouraging statistics in some vulnerable population demographics, Buhl believes “the outlook for 2012 is for rental rates to continue upward to the 2 percent range, while occupancies remain strong in the 92 to 93 percent range.”
He predicts that “political uncertainty may provide more drama in 2012 than any other market dynamic.”
In Norman, the student housing industry is an additional multi-family housing issue of impact.
While early build-out of a decade or more ago has finally filled in, proposals for more and bigger student housing complexes could turn that market soft again, Buhl said.
Joy Hampton 366-3539 jhampton@ normantranscript.com
