The rent surge: how millennials, minorities, and seniors are affecting the rental market
The Urban Institute has projected that by 2030, homeownership rates will drop to 61.3 percent. And this rental surge is something that the US housing market has yet to fully meet head on.
Growth in the rental market
As the US housing market is preparing for this sudden shift in housing needs, this will mean good news for those in the apartment building business.
The current expectation that many apartments will remain vacant throughout the year has been proven wrong. This assumption was made even despite the strong rent growth the market has been enjoying. And the growth will continue for the next decade or so. This growth is largely driven by three primary groups: millennials, minorities, and seniors.
Millennials and their needs
One group that’s been driving up the rental market are the millennials. With a passion for flexibility, need for convenience, love of amenities and community-based activities, more and more millennials are choosing to rent rather than own property.
In fact, Forbes reports that the homeownership rate for adults aged 18 to 34hasfallen to 13.2 percent, an all new low for the market. One of the main reasons for this is that millennials who are saddled with debt from college would rather not take on more debt. Renting offers more flexibility and freedom.
Minorities and housing
Traditionally, minorities have always chosen to rent rather than own property. This is largely because it is generally cheaper to rent than to own. There is also the ongoing issue of the disproportionate issuance of loans to non-white applicants especially for loans on housing. According to a study by Zillow and the National Urban League, fewer minorities apply and get approved for loans. Thus the most convenient housing option is to rent.
Seniors and renting
Due to the convenience and flexibility of renting, the central location of most rental properties, or simply because they want to downsize, more and more seniors are opting to rent. Renting allows them to not have to worry about maintenance, to be closer to their families, and to enjoy amenities that most homes in the suburbs don’t have easy access to.