As more and more of the younger generation continues to prefer renting over owning, developers and builders are starting to invest less in building homes and more in building apartments. Apartment vacancies are at 15-year lows at 4.2%, according to Reis Inc. Additionally, asking rates are at a 15-year high because there are less people owning, and renting is on the rise. Although some economists are cautious of an eminent peak in the apartment market, builders like Toll Brothers and Lennar continue to build in order to satiate market demand.
Toll Brothers, a luxury homebuilder, is planning to double its equity investment in apartments, and intends to expand from its current projects in the northeast to all over the U.S. Toll Brothers’ competitor, Lennar Corporation, has also increased their apartment building and holding budgets, and will expand in 25 major U.S. cities that have high demand, such as Los Angeles, San Francisco, and Miami. Although the trend right now is to rent, Lennar recognizes that the company could lose some renters to the housing market, and will try to retain some renters as homeowners. Lennar will offer discounts to renters with good payments histories, allowing tenants up to $10,000 off the home’s price.