In October, NAHB released an updated version of the statistical model it maintains for estimating the average price of a single-family home. Economist Paul Emrath has now published a companion model 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) and has been made available online in a form that readers 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 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 property owners and local governments may also use it to study how neighborhood characteristics affect rents.
The model is based on a benchmark or “standard” apartment, defined as one with the following features:
- 1,000 square feet of living space
- 2 full bathrooms (no half bath)
- 2 bedrooms
- 2 miscellaneous rooms (i.e., rooms other than bed or bath)
- located in a 3-story building
- no extra amenities (such as a fireplace, dishwasher, building security system, or use of a garage).
- is relatively new; i.e., built after 1989
Using the AHS data, the model allows users to vary features, geography and amenities and estimate the impact on gross rent. The following table presents the estimated impact on rent from adding the following features for a standard apartment located in a Southern suburb. For example, adding an extra bedroom would add, on average, $78 in monthly gross rent.
Likewise, Table 4 presents the results from the model demonstrating the rent impacts of various nearby amenities. As an example, locating the apartment building near a body of water (within a half block, but not directly on the waterfront) adds, on average, $33 in monthly gross rent. Access to nearby public transportation adds, on average, $29 in monthly gross rent.
These examples illustrate only a few of the scenarios that can be investigated and analyzed with NAHB’s rent estimator for apartments in buildings with five or more housing units. The model can be accessed online.