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Modeled after the NAHB House Price Estimator, a new NAHB Apartment Rent Estimator enables developers to see how much bang for the dollar they can get — or more rent they can charge — with the addition of different features to a standard apartment in a building with five or more units.
“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,” writes Paul Emrath, author of a special study on the estimator and NAHB’s vice president for survey and housing policy research.
“Owners of rental properties may use it to judge how a particular renovation would tend to increase the rent they could charge,” he says, and property owners and local governments can use the estimator to study the impact of neighborhood characteristics on rents.
The NAHB model estimates gross rent, which includes the amount the tenant pays to the property owners, plus the costs of all utilities except the telephone, irrespective of who pays them.
The model uses data from public files for the 2009 American Housing Survey (AHS), which contains information on 2,776 different variables on apartment features and the buildings and neighborhoods in which they are located.
The detail available in the AHS is limited to the four principal Census regions and the areas’ urban status — central city, suburb or non-metro — but not specific state or local jurisdictions.
The results discussed in the NAHB study are based on a “standard” apartment, which has 1,000 square feet of living space, two full bathrooms, two bedrooms, two miscellaneous rooms, is located in a three-story building built after 1989 and has no extra amenities — such as a fireplace, dishwasher, building security system or garage.
Among findings in the study derived from the Apartment Rent Estimator:
- The estimated gross rent is highest for a standard new apartment built in metropolitan California; the estimated rent is next highest in the Northeast.
The rent tends to be lowest for apartments built outside of a metro area.
The model estimates that gross rent for a standard new apartment will be nearly $1,100 a month if it’s built in a suburb of one of the large California metro areas, but only about $630 if built outside of a metro area.
- Within each region, suburbs show higher average gross rent than their companion central cities.
- All else being equal, gross rents tend to increase with the number of stories.
The estimated gross rent for a standard new apartment in a Southern suburb ranges from $738 if it’s located in a one- or two-story building to $1,108 for a location in a building with 10 or more stories.
This could reflect something about renter preferences, although it is more likely that building height is a proxy for location. High land prices tend to intensify the use of land, resulting in taller structures.
- In a Southern suburb, an extra bedroom adds $78 to the $776 rent for a standard apartment, followed by a working clothes dryer (adding $64), dishwasher ($59) and garage ($45).
Omitting a full bathroom has a negative impact similar to the positive effect of adding a bedroom — reducing the estimated gross rent by $73.
Adding an extra miscellaneous room — one that is not a bedroom or bathroom — increases the monthly rent by only $6.
- The neighborhood characteristics with the largest positive impacts on rents for a standard apartment in a Southern suburb include satisfactory shopping — such as grocery or drug stores — and a waterfront location, adding $53 and $51, respectively.
A one-half-block proximity to water adds $33, slightly more than being located near public transportation or in a community with recreational facilities like a clubhouse or walking trails.
The presence of trash or litter reduces the rent by $11 a month, although only for apartments located in the central city or suburbs of metro areas.
The Apartment Rent Estimator is available online in a form that readers with comparable Web browsers and Internet service providers can access and run interactively.
Running the estimator requires Microsoft Excel.
Before the file is opened, the security setting must be adjusted to allow macros to run. In the latest version of Excel, security is set from the “Developer” tab, which may not be automatically displayed in Excel’s ribbon.
In the past, NAHB has encountered compatibility problems with the estimator and Mozilla Firefox, as well as particular versions of some other Web browsers.
In addition, some Internet service providers may apply security or other procedures that prevent the estimator from running properly.
If there is trouble running the estimator, accessing a different computer with a different browser may help.
For more information, email Paul Emrath, or call him at 800-368-5242 x8449.