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The Evolving Landscape of Apartment Affordability in 2023: Not All is as it Seems

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The real estate market is a dynamic entity, constantly evolving and adapting to the socio-economic changes of the times. For real estate investors, understanding these shifts is crucial to making informed decisions. The recent "RealPage Market-Rate Apartment Affordability Study 2023 Update" sheds light on some intriguing trends in the market-rate apartment sector. Let's dive in!

The Remarkable Surge in Renter Incomes Since 2020

A pivotal trend that has emerged in recent years is the significant rise in renter incomes. Since 2020, renter incomes have experienced a notable surge. Data from the "RealPage Market-Rate Apartment Affordability Study 2023 Update" showcases this trend vividly. In 2020, the median household income for renters in market-rate apartments was hovering around the $60,000 mark. Fast forward to 2023, and this figure has seen a substantial increase, approaching the $80,000 threshold. This growth in income, even as the demographics remained consistent, underscores the evolving financial landscape for renters.

Graph showing median rental income from 2017 to 2023

This uptick in renter incomes can be attributed to various factors, including economic recovery post-pandemic, wage growth in certain sectors, and a shift in the type of professionals opting for rental accommodations.

For real estate investors, especially those eyeing multifamily Class B assets, this rise in renter income signifies an opportunity. With current mortgage rates surging above 7%, renters having a higher disposable income will likely stay the course, and the demand for properties that offer a blend of comfort, convenience, and luxury are precisely what Class B assets provide.

The Rising Star: Apartment Affordability for Multifamily Class B Assets

  1. A Sweet Spot in Affordability: While the national median rent-to-income ratio has surged to 23%, multifamily Class B assets present a unique proposition. These assets strike a balance, offering rents that are neither too high nor too low. Specifically, the average rent for Class B properties stands at a competitive $1,776 as of 2Q23.

  2. Stellar Vacancy Rates: One of the hallmarks of a promising real estate investment is its vacancy rate. Class B assets shine in this department, boasting a 5-year average vacancy rate of just 4.1%. This is a testament to their consistent demand and the value they offer to renters.

  3. Inversely Correlated with Affordability: An intriguing observation from the study is the inverse correlation between apartment property class and affordability. As we move from Class A to Class C, there's a noticeable decrease in the median rent-to-income ratio. This trend underscores the appeal of Class B assets, which offer a middle ground in terms of both price and quality.

graph showing apartment classes compared to median renter income

Why Investors Should Continue to Bet Big on Class B

  • Consistent Demand: The steady demand for Class B assets, as evidenced by their impressive vacancy rates, suggests that they cater to a significant segment of the population. These properties offer a blend of affordability and amenities that resonate with a broad audience.

  • Room for Value-Add Opportunities: Class B properties often present opportunities for upgrades and renovations. Investors can enhance these assets, potentially increasing rents and overall property value.

  • Resilience in Market Fluctuations: Class B assets tend to be more resilient during economic downturns. Their mid-range pricing appeals to a wide demographic, ensuring consistent occupancy even in challenging times.


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Key Takeaways

  1. Dynamic Real Estate Market: The real estate market is continuously changing, influenced by socio-economic factors. It's vital for investors to stay informed about these shifts.

  2. Renter Incomes on the Rise: Since 2020, there has been a significant increase in renter incomes. In 2020, the median household income for renters was around $60,000, but by 2023, it has approached the $80,000 mark.

  3. Factors for Income Growth: The increase in renter incomes is attributed to the economic recovery post-pandemic, wage growth in specific sectors, and a shift in the demographics of those choosing to rent.

  4. Opportunity for Investors: The rise in renter income presents an opportunity for real estate investors, especially in the multifamily Class B asset sector. With higher disposable incomes, renters are more inclined towards properties that offer comfort, convenience, and luxury.

  5. Multifamily Class B Assets Highlights:

    • Affordability: Class B assets offer a balance in terms of rent, with the average rent being $1,776 as of 2Q23.

    • Low Vacancy Rates: These assets have a 5-year average vacancy rate of 4.1%, indicating their consistent demand.

    • Inverse Correlation with Affordability: There's a trend where as you move from Class A to Class C apartments, the median rent-to-income ratio decreases, making Class B assets appealing as they offer a balance in price and quality.

    • Steady Demand: Class B assets cater to a large segment of the population due to their blend of affordability and amenities.

    • Value-Add Opportunities: These properties often have potential for upgrades and renovations, allowing investors to increase the property's value.

    • Economic Resilience: Class B assets are more stable during economic downturns due to their mid-range pricing.


The 2023 landscape of the real estate market is rife with opportunities, and multifamily Class B assets stand out as a golden ticket for investors. In my opinion, their unique positioning in terms of affordability, consistent demand, and potential for value-add make them a compelling choice for those looking to maximize returns. As always, be sure to consult with your financial advisor and do your own due diligence before joining into any investment.

Be Bold, Be Great, and Keep Pushing Forward!

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About Ellie Perlman

Ellie Perlman is the founder of Blue Lake Capital, a commercial real estate investment firm specializing in multifamily investing throughout the United States. At Blue Lake Capital, Ellie partners with both institutional and individual investors to grow their wealth by achieving double-digit returns by investing alongside her in exclusive multifamily deals they usually don't have access to.

A defining factor of Blue Lake Capital’s strategy is founded in utilizing machine learning/artificial intelligence throughout the course of all acquisitions and asset management. This advanced technology enables the company to produce accurate and data-driven forecasting for all assets on a market, property, and even tenant basis. In doing so, Blue Lake is able to lead commercial investments with the full capabilities of today’s technology.

Blue Lake Capital is the sponsor of REady2Scale, a podcast that highlights the assets, processes, and strategies for the multiple approaches to successful real estate investing.

Ellie started her career as a commercial real estate lawyer, leading real estate transactions for one of Israel’s leading development companies. Later, as a property manager for Israel’s largest energy company, she oversaw properties worth over $100MM. Additionally, Ellie is an experienced entrepreneur who helped build and scale companies by improving their business operations.

Ellie holds a Masters in Law from Bar-Ilan University in Israel and an MBA from MIT Sloan School of Management.

You can read more about Blue Lake Capital and Ellie Perlman at


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