Are Millennials Buying Homes or Renting?
As mentioned in previous posts, millennials are currently the largest renting demographics and as more millennials leave their parents’ home and enter the work force their need to rent apartments could mean big money for landlords and property managers. Based on supply and demand if millennials are more inclined to rent than buy right now as previous reports have shown, that could increase demand for rentals and consequently lead to increase rent prices.
However, new reports indicate that millennials between 25 and 35 make up the largest demographic of first time homebuyers (source). This exit of Millennials out of the rental market could signify a large drop in demand for rentals. However, currently that does not seem to be the case. While higher rents are leading some to buy houses, it is still difficult for millennials to buy homes as house values are increasing at a higher rate than salaries. Furthermore, millennials are almost the largest demographic in the United States so even if they represent a large portion of homebuyers it does not indicate a majority of them are exiting the rental market in fact it is likely that younger millennials are entering the rental market faster than older more financially stable millennials are buying homes. In addition, in certain housing markets millennials are completely priced out of being able to buy homes and therefore must rent. Bloomberg Business reports that in at least 13 major metropolitan areas, young adults have nowhere near the wages and savings to buy homes.
Since millennials have a preference to live in these metropolitan areas it is unlikely many of them would leave to buy a cheaper home. However, other housing marketing like Detroit, Pittsburgh and Cincinnati are more financially viable for millennials to buy homes which could potentially put more pressure on rents in those markets.
This post is provided by RISSOFT Residential and Commercial Property Management Software, specializing in innovative and cutting-edge property management software for all 50 states. Request a demo or contact us today to receive more information.
Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.
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