This report was prepared for the National Multifamily Housing Council and the National Apartment Association by Hoyt Advisory Services and Eigen10 Advisors, LLC.
Executive Summary
This report summarizes the methods and findings of a study that was conducted by Hoyt Advisory Services on behalf of the National Apartment Association (NAA) and the National Multifamily Housing Council (NMHC). The study explored the impact the apartment industry had on the US economy in 2013 and 2016. Four different types of industry expenditure (activity) were identified and separately analyzed in order to fully capture industry impacts. They are:
A. Construction of new rental units;
B. Expansion, renovation and repair of existing properties;
C. Property operations and maintenance activities; and
D. Spending by renting households
Key Findings - US
The apartment industry has a large and growing impact on the US economy.
- In 2016, it generated over $3.4 trillion of national economic output and supported 17.5 million US jobs. This represents almost 19% of total GDP (in nominal dollars) and 12% of the employment growth for that year, up from 17% and 11% shares, respectively, in 2013.
- Over 88% of total industry impacts -- $3.0 billion of economic activity and 16 million jobs -- were generated by renter household spending (Segment D). Impacts directly attributable to the apartment industry (Segments A through C) totaled $394 billion and 1.43 million jobs.
- All four industry segments posted very strong growth over the 3 years studied, led by resurgent construction activity: the impacts from new apartment construction almost doubled between 2013 and2016. In aggregate, economic impacts from all 4 segments expanded by 21% and employment impacts by 16%.
- Six economic and demographic factors were important drivers of impact growth across the 4 industry segments: population and employment growth, rental share of the total housing stock (tenure split), size and growth of the rental stock’s 5+ unit segment, renter household income gains, and average effective rent growth.
State and Metro Results
Subsequent rounds of analysis were conducted for the 50 states and the District of Columbia as well as for 50 major metropolitan areas. Results at each geographic level exhibited the same pattern, i.e., significant economic and job impacts with robust growth over the 3-year study period.
- In all, the 50 states+DC (Sum of States, or SOS) generated $2.95 trillion of economic impacts and 14.2 million jobs in 2016. SOS impacts increased by 21% ($518 billion in output) and 15% (1.86 million jobs) between 2013 and 2016.
- Our 50-metro cohort contributed $2.05 trillion and 9.2 million jobs in 2016 – up 19% ($329 billion) and 12% (949 thousand jobs), respectively, from 2013. The sum of metro (SOM) totals represent more than 60% of total US impacts for both categories.
- The performance of individual states and metros was tied to the six impact growth drivers that we identified for the US as a whole. In general, the largest states and metros dominated impacts in absolute terms but – with a few exceptions – posted average or below-average growth relative to their peers. On a percentage growth basis, several mid-sized states and metros that have attracted an outsized share of post-recession population and economic gains top their group rankings.
Prepared by: Hoyt Advisory Services and Eigen10 Advisors, LLC
June 2019
