Are Micro Units a Good Investment?

apartment, studio, micro units, renovation

The housing situation in many large cities across the country is deteriorating rapidly. In Southern California, population growth continues to skyrocket housing demand. Due to housing regulations, NIMBY’ism, and a host of other factors, new housing isn’t being constructed nearly fast enough to meet demand. This is causing a steadily rising housing cost that is quickly becoming unsustainable for most residents of the area. A 5% increase in rent prices in LA would make an additional 2000 people homeless, according to projections by real estate firm Zillow. So, what can be done to alleviate this situation? Micro units might be the answer.

Making the Most of a Small Space

A micro unit is a living space typically around 350 sq. ft. or smaller. Such spaces used to be quite common, in duplexes and boarding houses across the country. Over the decades, however, new housing regulations made it impossible to rent out spaces that small in many areas. The trend towards more spacious apartments and spread out living spaces continues today, but it’s that same trend that’s largely responsible for the current housing crisis.
Micro apartments allow property owners to increase population density without having to build additional housing. This cuts down on the cost of housing for both the property owner and their residents. Micro apartments also mean more tenants for apartment owners, which further incentivizes their creation.

Striking a Balance

Of course, there are drawbacks to this kind of living arrangement. Such close quarters makes micro units less-than-ideal choices for groups of people. The ideal tenant for such a space is definitely a single individual. However, as the LA times points out, allowing individuals to afford their own apartment without relying on roommates means more spacious accommodations become available for families. It is unlikely that the majority of the population will embrace micro unit living any time soon. Of course people want more space if it’s available (assuming they can afford it.) For those who want to live in these high population areas, though, and don’t want to pay more than 50% of their income in rent, micro apartments might be the perfect solution.

Leave a Reply