It hardly remains a secret that most of today’s renters likely fall into the millennial age group.
The number of 18 to 34-year-olds who own a home has fallen to a 30-year low and for the first time in more than a century, young people are now more likely to live with their parents than with a spouse.
Times, they are a-changing.
The demand for apartment homes among millennials has skyrocketed. This young adult age bracket has essentially been driving the recent major rental market increase of the last few years and there are quite a few reasons why this is happening.
1. PURCHASING MEANS MORE DEBT
With student loans accompanying the majority of recent grads after college, it’s not a surprise that millennials prefer submitting a monthly rent check over the acquisition additional mortgage debt.
While in some cases mortgage payments can compete with rent prices, recent grads likely don’t have the necessary funds for an initial down payment.
(Source: AppFolio)
Millennial renters in expensive metropolitan areas tend to widely underestimate the amount needed for a down payment, in many cases by 50% or more.
It's been estimated that the majority of millennial renters will need a decade or more before they can afford a 20% down payment on a home.
Why They Rent: Mortgage Debt, No Down Payment, Easier Qualification
2. RENTING IS MORE AFFORDABLE
While renting requires accustomed rent and utility payments, home ownership requires a much larger financial obligation.
A recent research study indicated that the vast majority of millennial renters (79%) want to purchase a home, but that affordability is the biggest obstacle that they face.
(Source: ApartmentList)
Homeowners must account for maintenance, repairs, vendors, property tax, and perhaps association fees in addition to the utilities and mortgage.
With most millennials on a tight budget, this is easy to conclude.
Why They Rent: Tight Budget, Additional Costs
3. AMENITIES ARE APPEALING
Most apartment communities come with a pool and fitness center gym. But apartment amenities seem to be bigger and better each time a new community is built.
Amenities such as Zen gardens, dog parks, and rooftop terraces are just the tip of the iceberg. I’ve seen communities go as far as offering things like wine cellars, spas, and bocce ball – all accessible without stepping foot outside the complex.
In fact, the idea of having access to amenities has become so appealing to millennials that most say they plan to rent for the foreseeable future.
Why They Rent: Amenity Access, Convenience
4. GEOGRAPHIC FLEXIBILITY
When renting, you have the ability to choose where you want to live (generally speaking). Millennials love choices, and with larger cities providing unique submarkets, they can choose where they want to live based on what’s most important to them.
Urban areas are extremely attractive for the ‘Y generation’. Residing in the city provides access to retail, restaurants, entertainment, and a variety of other tempting options.
Millennials drawn to the liveliness of metropolitan areas likely can't afford to own a home there. If city living is a priority, millennials will certainly sacrifice homeownership to get the location they desire, and that means renting.
Why They Rent: Location Options, Surrounding Access & Entertainment
5. FREEDOM TO MOVE
Recent college grads enjoy the freedom to move around. As this generation’s professional careers are just beginning, so to are their lives as an adult. Settling or being confined to one location is a bit daunting and for this reason, renting an apartment (instead of moving right into homeownership) seems like the smarter decision.
Young people can relocate for a new job or personal opportunity without being tied down to a mortgage payment. Millennials are focused on finding the right job, a city that fits their personality and exploring new things.
Why They Rent: Flexibility, Dynamic Desires