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After Increasing During the Pandemic, Fewer People Living in Three-Bedroom Apartments
In another example of apartment basics going back to how they were before the pandemic, the number of people living in different types of apartments has gone back to normal patterns from before COVID-19. Specifically, fewer people are living in the biggest type of apartment – three-bedroom units – compared to the high numbers in 2021 and 2022.
As of January 2024, the number of people living in one-bedroom and two-bedroom apartments is much higher than in three-bedroom and efficiency units, according to data from RealPage Market Analytics. The occupancy rate for three-bedroom and efficiency units is about 70 basis points (bps) lower than the national average. This means things are back to normal in terms of how many people are living in each type of apartment.
Across the country, the overall occupancy rate was 94.1% in January 2024, the lowest it's been in 10 years. However, when looking at different types of units, one-bedroom and two-bedroom apartments have the highest occupancy rates, which are in line with the national average. In January, the occupancy rate for one-bedroom apartments was 94.1%, followed closely by 94.2% for two-bedroom units. Three-bedroom and efficiency units had lower occupancy rates in January, with 93.4% and 93.3% respectively.
Before the pandemic, the highest occupancy rates were generally seen in the two most popular types of apartments: one-bedroom and two-bedroom units. These are also the most common types of apartments, making up the largest portion of apartments across the country. Three-bedroom and efficiency units make up a much smaller percentage of apartments overall.
During the high demand for apartments in 2021 and 2022, when more people were moving into apartments across the country, all types of apartments saw an increase in occupancy. However, three-bedroom units saw the biggest increase, going up by 270 basis points (bps) from the pre-pandemic occupancy rate in February 2020 of 94.7%. The other types of units also saw increases, though not as big, ranging between 210 bps and 220 bps.
Considering the circumstances of the pandemic, it's not surprising that this has happened. With more people working from home, efficiency units were less attractive to many renters, leading to fewer people living in them. Many renters needed more space for a home office, making larger units more appealing.
At the same time, there was a surge in new households in mid-2020, which slowed down to a more normal but still strong growth later in the year. Since February 2020, the number of households in the U.S. has increased by about 6%, according to Federal Reserve Economic Data (FRED) from November 2023, the most recent data available.