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WASHINGTON, DC-A lot of attention is given to the rising rate of home ownership, but one of the fastest growing segments of the housing market over the past few years has been rental apartments for higher-income households. A new study commissioned by the National Multi Housing Council, headquartered here, notes that apartment households with real income above $50,000 per year has been growing at nearly 8% annually.

The report, Upscale Apartment Market: Trends and Prospects, notes that upscale renters are a disparate group. Approximately half of them are people for whom apartment life is a transition to a house or condominium, while 30% have chosen a rental as a long-term lifestyle. The former are older, live mostly in large cities and the Northeast and are often single women.

Going forward, the upscale apartment market will match, and perhaps surpass, the overall growth rate for housing demand over the next decade, according to the study. One factor influencing this trend is the convenience of apartment living; it frees tenants from commuting long distances and attending to a lot of “work around the house.”

Another incentive is that capital gains taxes have been eliminated on the sale of most owner-occupied housing. That gives those who wanted to rent but were reluctant to sell their home less they owe the IRS, the option of leasing. One group that may take increasing advantage of this change are those who are transferred to another part of the country who once had to buy another house within two years of the sale of their old home to avoid the tax. In addition, parents of adult children who have moved out may want to cash out the equity in a large home and rent a smaller apartment.

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