Millennials are putting off home ownership in a major way – only 11 percent of people between the ages of 20-29 have a mortgage. It is such a huge trend that Millennials have picked up a new nickname, “Generation Rent.” So that means apartment communities across the country are filled to the brim with these young renters … right?
Well, not so fast. According to a recent article by the National Multifamily Housing Council (Where Are All the Young Renters? December 17, 2014), only 24 percent of people between the ages of 20-24 are householders — less than half of the overall rate of 52 percent. Instead of striking out on their own and renting apartments, many young people are instead choosing to live at home, live with other family members, or share space with roommates.
The reason for this is primarily financial. According to Fannie Mae’s 2014 National Housing Survey, 29 percent of adult children (ages 18-34) living at home claimed that they are saving money while enrolled in school, and 23 percent say they don’t earn enough income to live on their own. At the same time, those adult children ages 23-34 are working – 48 percent full-time and 23 percent part-time. And for adult children ages 18-22, 20 percent work full-time and 38 percent work part-time.
While financial reasons play a major part in why adult children are living at home longer, there’s another huge reason – the parents prefer it. An impressive 68 percent of parents stated that they prefer to have their adult children continue living at home rather than finding an alternate living arrangement.
But when they do finally move out, they are expected to rent in huge numbers. The National Housing Survey concluded that 66 percent of Millennials are more likely to rent when they move out of their parent’s home. And of these future renters, most expect to be moving out in less than two years.
Millennials are definitely “Generation Rent” – when they get around to it. So what can you do to attract these renters when they finally decide to find their own place?
First, affordability is important. According to the State of the Nation’s Housing 2014, “households under age 35 accounted for a quarter of renter growth in 2005-2013.” But with high demand for apartments and vacancy rates at their lowest point in over a decade, the increases in rent plays a major role in what is keeping Millennials in their parents’ homes.
To help balance this trend, some developers are focusing on reasonably priced housing to attract younger renters. According to an article in the Wall Street Journal, many cities are hoping micro-apartments will lure young renters to their communities. Others are focusing on affordable, mixed-use developments.
But while affordability is a major factor, it can’t be at the expense of certain amenities. This hyper-connected generation looks for free Wi-Fi and built-in docking stations. Millennials (a whopping two-thirds of which own pets) also prefer amenities such as on-site dog parks, fitness centers with personal trainers and classes, and community get-togethers.
In order to attract this incoming wave (albeit a slow-moving one) of Millennial renters, some newer apartment communities are being developed with Millennials in mind. These newer developments are including state-of-the-art amenities such as electric car charging stations, cycle centers with lockers, cyber cafes, solar-heated swimming pools, and even pet washing stations.
While some may be delaying their apartment search for now, Millennials are (and will continue to be) a huge chunk of the rental market. According to the State of the Nation’s Housing 2014, the number of renter households is expected to increase by “4.0-4.7 million in 2013-23,” and while that has slowed a bit recently, the increase will exceed the “long-run average over the past several decades.”
And according to the study, “15 Economic Facts About Millennials” published by the Council of Economic Advisers, this group now represents the largest generation in the US, “comprising roughly one-third of the total population in 2013.” And the largest one-year age group is 23 – meaning this generation will be a major part of the population for years to come.