The multifamily leasing market has been steadily growing over the last ten years, and townhouses and apartments have become more popular for rental properties. But is this change driven by the younger generation? Are millennials really the ones driving the demand for multifamily rentals like townhouses, apartments, and the like?
Younger Americans Prefer to Rent Their Living Spaces
A rent.com study showed that as many as 80 percent of younger Americans (between the ages of 18 and 34) had no intention of buying a home anytime soon making it seem like there might be something to this being a generational trend.
Where their parents only leased their homes until they were financially stable enough to buy a home, the younger generation seems content enough to keep renting.
The Factors Behind the Rising Popularity of Multifamily
Behind the rising demand for multifamily units for rent are a couple of factors, not necessarily only affecting millennials.
There has been a growth in the numbers of renters across all the demographic classes, and we’ve also seen strong economic growth and historically low numbers of unemployment.
In addition to these factors, there has been a lot more job portability, meaning that people are moving around and not necessarily putting down roots anywhere, making it more reasonable to rent than buy housing. There is also a significant capital for commercial real estate investment, as well as an accommodative fiscal policy by the Federal Reserve.
Since these factors aren’t strictly tied to the millennial age group, millennials probably aren’t solely responsible for the uptick in multifamily demand, but they are certainly boosting it by choosing to rent for much longer than their parent’s generation did.
Why Millennials Choose to Rent
Many millennials choose to rent long-term rather than buying starter homes as has been common in earlier years. The reasons millennials are choosing rent could be the steadily rising cost of owning a home, they have student debt to pay off, or they may have lifestyle preferences that make it more attractive to rent rather than own.
Is Homeownership No Longer The American Dream?
Newer surveys done by rental and homeowner households show that as many as 36% of people who are homeowners wish they were renting, 32% of those currently living in rental houses said they didn’t think the American Dream included owning a home, and 20% of the people surveyed weren’t planning on buying a home within their lifetimes at all.
A Millennial Driven Trend
It does look like millennials are doing their fair share of contributing to the demand in the multifamily rental market. Their lifestyles, approach to the future and financial situation seem to be pointing them away from getting bogged down with owning a home. Perhaps the amount of work it takes to maintain a home is also a deterrent to the millennial lifestyle.
However, since the shift to rental and multifamily demand isn’t only across one demographic, it does seem likely that the financial situation of so many millennials also mimics that of the rest of the country, along with the desire to move around for portable jobs, rather than staying in one place.