MILLENIALS To rent or not to rent

Millennials, or those born between the early 1980s and mid 1990s, are now at the age where some of life’s biggest events come up. College has ended and careers have begun, marriage and kids may be on the horizon, and finding housing is a primary concern. For this last event, there are two options: renting or buying (because we’re not counting living with your parents). Here’s what we know about millennials and their housing choices, along with what this means for property investors like you.

Renting is Popular…Really Popular

In America, more people decide to rent rather than buy a home. In New York, this translates to 69% of the population, 58% in San Francisco, and 52% in Los Angeles. Here in Kansas City, roughly half of the residents rent, so we’re right on par with other major cities. For millennials, these same statistics apply, with the majority of this generation currently renting. However, with rent prices rising and home prices remaining affordable, we’re starting to see a shift in these numbers – especially among millennials.

Millennial Home Purchases may be on the Rise

Recent figures point to a changing tide in the rent vs. buy dilemma for the millennial generation. While the majority can still be classified as renters, most have plans to buy a home in the near future. In fact, a survey done by TD Bank of 1,002 millennials showed that nearly half plan on buying a home within the next two years. To drive home the fact that millennial home purchases are on the rise, the National Association of Realtors has released data showing that millennials made up the largest segment of homebuyers in 2015, representing 32% of buyers. For first-time buyers, that figure was even greater at 68%.

What Does this Data Tell us?

Simply put, this information reveals that millennials are a force to be reckoned with when it comes to the housing market. Most millennials didn’t experience the housing bubble crash in 2008 first-hand, but watched their parents go through it instead. With this knowledge under their belts, not to mention their optimism that home buying is a better choice, they will likely continue to dominate the market with their buying power.

Why Investors Should Care

As an investor, these trends should factor into how you handle your future investments. Obviously, with most millennials still opting to rent instead of purchase, at least for the time being, this is good news for rental properties, which will experience lower vacancy rates and greater cash flow. Only time will tell how this projected buying trend will affect rental properties in the coming years, but economists and other experts in the industry predict appreciating home values, increasing populations and solid job gains – which is good for everyone.