Millennials are trending toward renting vs homeownership. So, what do real estate developers need to do?
According to the Joint Center for Housing at Harvard University and the Inland Real Estate Investment Corporation, "millennials are those born between 1980 and 1996 and are the largest generation in the United States." And, they prefer to rent versus buying a home. There are reasons as to why this is. These reasons are due to the fact that "they have the highest student loan debts of any generation and problems finding full-time employment, making it difficult to save for a down payment on a starter home." Also, Millennials believe that there is a need to be more mobile/flexible as it relates to housing so if they get a promotion or obtain a new job that requires them to move to another city, state, or another country they would not be tied down with a mortgage or the inconvenience of trying to sell a house.
With that being said, real estate developers need to re-think about doing more multi-family units for rent versus for-sale single-family units. And, homebuilders will soon be struggling to stay afloat because of the millennial trend toward renting.
Click on or copy and paste in your browser the following link to read more about this unquestionable trend:http://inland-investments.com/uploadedFiles/Channels/Knowledge_Center/Inland-Insights-Millennials-Rentership-Society.pdf
[{"id": "da4db1u", "text": "The overlooked issue is that millenials have more outstanding debt than previous generations. Cars are more expensive and student loans are very cumbersome. Most millenials won't pay off their student debt until letter thirties. I think home builders will be fine. They week just be entering the market later. They're also having kids later and moving to suburbs later in life.\n\nAlso, there comes a topping point where rent rises to the point when owning becomes more financially viable. We are starting to see this in California.", "replies": [{"id": "da55l05", "text": "Yeah i'm not paying my student loan debt until at least 40s....", "replies": [], "depth": 2}], "depth": 1}, {"id": "da4ftv3", "text": "Also perhaps millennials no longer want homogeneous cookie-cutter homes. We like urban areas not only because we get to live closer to our jobs but there's a sense of diversity.    ", "replies": [], "depth": 1}, {"id": "da4rrcr", "text": "I'm seeing some rent to buy plans some developers are using to target millennials where a certain portion of the rent paid up to x amount turns into equity if they decided to down the road purchase the place they've been renting. \n\nEdit: I might be fuzzy on specifics but if I recall that 'equity' credit was definitely transferable to other developments by the developer. Not sure if they could buy the unit they lived on though (because might run into problems with guaranteeing a certain level of rental stock). ", "replies": [], "depth": 1}, {"id": "da4x5uc", "text": "People continuously overlook the simplest facts of demographics and supply/demand when talking about Millennials and the Real Estate Market. Baby Boomers aren't selling yet, but when they all start to...there is going to be a huge excess supply and very little demand until prices adjust. Millennials won't rent forever, just long enough to watch the market crash and pick up the pieces.", "replies": [{"id": "da55mec", "text": "Yeah that's a pretty interesting fact... it will prob be a buyer's market at that point", "replies": [], "depth": 2}, {"id": "daawlk1", "text": "Yup. This trend is hugely overstated and is more driven by predictable demographics than a fundamental change. The rate of renting (vs buying) is roughly the same for 20-35 year olds as it has been for every past generation", "replies": [], "depth": 2}], "depth": 1}, {"id": "da5v6qa", "text": "Hasn't this been news for the past 10 years?", "replies": [], "depth": 1}, {"id": "daa7y9g", "text": "Millennials don't currently have the capacity for mortgage debt, since student loans have ballooned so much since they have gone to school. Once student loans go down due to repayment, I see Millennials buying houses just as plenty of previous generations have done so.", "replies": [], "depth": 1}]