Demand for Three-Bedroom Rentals on the Rise in a Shifting Market
Three-bedroom townhomes and apartments both for sale and for rent saw the weakest demand in comparison to two-bedroom units pre-pandemic, but an affordability crisis and the rise of remote work over the past two years shifted housing preferences in favor of additional space, Housing Design Matters reports. Three-bedroom units are more affordable on a price per square foot basis, and some tenants and buyers are looking for flex rooms to turn into home offices.
Two years into the COVID-19 pandemic, builders are fielding requests for four-bedroom units as housing demand peaks nationwide. While pre-sales offer some wiggle room for builders to adjust their strategies to incoming demand, many for-sale builders are leaning away from pre-sales in the midst of a strained supply chain with unpredictable lead times and material shortages.
An apartment builder recently told me that the demand for three-bedroom units was so off the charts that they could have leased up the entire project with only three-bedroom units. Unfortunately, the builder didn’t learn about the demand for the three-bedroom units until he started lease ups – at which it was too late to pivot.
What is driving the demand for three bedrooms over two? One theory is cost. It doesn’t add that much cost to add a bedroom to a plan. In fact, on a price per square foot basis, the three-bedroom unit looks more affordable if it has the same number of baths as the two-bedroom unit. Of course, they both have kitchens – which are the costliest per square foot.