Millennials are putting off home-ownership in a big way – so much so that they’ve picked up a new moniker, “Generation Rent.” According to the US Census Bureau, homeownership among millennials has been on a gradual but steady decline for years. With a major portion of an entire generation choosing to rent apartments rather than buy homes, it is changing the real estate landscape in a major way. Cities that offer multifamily housing in sought-after neighborhoods – those with good schools and high opportunity – are thriving. And, according to this article by NPR, the availability of quality rental housing will put communities “in competition with one another as a more mobile workforce is able to vote with its feet.”
Millennials are saddled with higher student loan debt than generations past. And, after the Great Recession, home loans are much more difficult to obtain than they were in the early 2000s – stricter guidelines and higher down payments often put homeownership out of reach for millennials. But, even those who can afford to buy a home are instead choosing to rent. According to Forbes, only 11 percent of millennials between the ages of 20-29 have a mortgage.
Millennials witnessed the impact of the housing crisis on parents, friends, and family members. They saw the vast number of foreclosures and the loss of home values and it changed the way they look at homeownership – it is no longer the American Dream.
As a generation on the move, millennials don’t relish the idea of “settling down.” Instead, they want the freedom renting offers. They also enjoy the social aspects of renting and the amenities apartment communities can offer. And while most millennials believe they will own a home “someday,” they are in no hurry to make that a reality.
Builders are taking notice. According to the New York Times, a large chunk of the growth in housing construction since the recession is due to the construction of apartment communities. These new apartment communities are being built with millennials in mind – built-in iPod docking stations, movie theaters with stadium seating, community fire pits, on-site dog parks, fitness studios with classes, even residents-only bowling alleys and indoor basketball courts are showing up as amenities. Many existing apartment communities are also finding ways to cater to their millennial residents, hosting events such as wine tastings and cooking classes.
Attracting “Generation Rent” is also very different – this is the hyper-connected generation, after all. Apartment communities catering to millennials find they need an attractive, user-friendly website, active social media sites, and great online reviews. Some are even creating smartphone apps that allow residents to request repairs, pay rent, and check on deliveries.
Millennials, as a whole, are waiting to settle down … they put off marriage, families, and home ownership. They are much more nomadic than generations past – spending more on travel and moving around more frequently – not only from state-to-state, but even overseas. As technology frees up the next generation (and most likely all of those to follow), more people are working from home, giving them even more flexibility to move around at-will.
Eventually, most millennials say they will buy a home – but much later, and in fewer numbers than ever before. In 2013, the average first-time homebuyer was 31 years old, and that age is expected to continue to rise for the next several years. That means “Generation Rent” is here to stay – at least for now.