A new estimating tool by NAHB Economics lets builders and prospective renters gauge how much certain amenities add to typical apartment rents across various regions.
In October of 2011, NAHB released an updated version of our statistical model for estimating the average price of a single-family home (see NAHB House Price Estimator, Updated). This week, we followed up with another great estimating tool that's designed to estimate average gross rent for an apartment in a building with five or more housing units. Like the house price model, the NAHB rent estimator is calibrated with data from the American Housing Survey (AHS), a nationally representative survey of housing units conducted by the U.S. Census Bureau and funded by HUD. And similar to the house price model, the rent estimator is available online in a form that readers with compatible web browsers and Internet service providers can access and run interactively.
By using the NAHB rent estimating model, builders and prospective renters can get an idea of how the addition of a particular amenity affects the rents charged and paid for similar apartments in the region. Developers looking to expand into other areas and relocating households can use the model to compare rents for a particular type of apartment across broad geographical regions. Owners of rental properties may use it to judge how a particular renovation would tend to increase the rent they could charge. And finally, property owners and local governments may use it to study how neighborhood characteristics impact rents. Below are a few quick highlights of the rent estimator's findings:
* The highest estimated gross rent for a standard new apartment can be found in the metropolitan California region, with the next highest estimated gross rent being found in the Northeast.* Adding a third bedroom to a standard new apartment built in a Southern suburb adds $78 per month to gross rent, while omitting one of the two full baths found in the study's "standard apartment" reduces gross rent by $73.
* Locating a standard new apartment in a neighborhood with satisfactory shopping, such as grocery stores and drug stores, adds $53 per month to gross rent in a southern suburb.
* The presence of trash or litter in the neighborhood reduces estimated gross rent for the standard new apartment in a southern suburb by $11.
NAHB members can access the NAHB Rent Estimator tool free of charge at: www.nahb.org/rentestimatorreport.
This article was printed with permission from the NAHB
