This story was originally published in Builder.

Adobe Stock / Romolo Tavani

Single-family and multifamily builders are definitely related. But they’re not so much siblings as second cousins. Both sets of builders have to buy land, get approvals, and build housing. But then things diverge. Single-family builders sell a house and walk away, while in most cases multifamily builders hold a property and have an ongoing relationship with consumers.

That’s a big difference. But at this point in time there’s a bigger, more important difference: Multifamily builders have seen starts quadruple since they bottomed out in 2009, while single-family starts haven’t even doubled since hitting bottom in 2010.

Why? Multifamily builders have done the better job of reaching 25- to 36-year-olds. Yes, they have advantages. Renters don’t have to come up with a big down payment nor do they have to qualify for a mortgage, and single people are naturally more likely to rent than buy.

Additional factors put single-family builders at the disadvantage. Student debt is a burden for 45 million young people—one-third of which live with their parents and haven’t yet formed an independent household. And for the first time in 40 years, according to the University of Michigan’s consumer sentiment survey, younger Americans are more pessimistic than older Americans. And pessimists are more reluctant to buy than rent.

But let’s face it. Those negative factors to some degree affect the multifamily market as well, and that market is outperforming the for-sale market. Why? It’s pretty simple, I think. Multifamily builders are doing a better job of satisfying younger Americans’ housing needs.

A case in point is a young multifamily developer I met a few months ago. He told me about the success of his most recent development, a 200-unit project in San Francisco. I think the secrets of his success might apply to single-family builders who want to crack the first-time buyer market.

The development is in the city, where many young people want to live. It’s possible many single-family builders can’t build right downtown, but certainly some can find sites as close in as possible.

The building has no parking. To control costs, maybe single-family builders should consider offering houses with a one-car garage or—heaven forbid—no garage.

The design of the building is contemporary. Maybe it’s time for single-family builders to give modern design a chance. If the word “modern” makes you uncomfortable, think of it this way: It’s the design buyers seem to prefer.

The apartments are small, and, in the case of the smallest unit at 160 square feet, really small. Instead of building mom and dad’s big Oldsmobile, maybe single-family builders should try to build a 1,200-square-foot house.

The largest units in the building have four bedrooms that share a compact common area, so renters can live together and save money. Why don’t more single-family builders develop plans that give homeowners the option to rent a room?

The only generous space in the building is a first-floor common area that brings residents together. Single-family builders routinely build clubhouses in retirement communities, so why not clubhouses for first-time buyers?

In fact, maybe it’s time to visit one of your second cousins’ projects to see for yourself what lessons you can learn about building starter homes for young Americans, many of whom would buy if you were building what they need and want.

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