Renting an apartment can be a challenge for new college graduates, who are facing the hottest U.S. rental market in a decade, plus some unexpected competition from millennials — people aged 24 to 40 — and Even Baby Boomers – Club Over 57.
“You have aging millennials who are creating families that should move from rental conditions to ownership, but because of the lack of housing supply, that has been put on hold in many instances. And so, what you are seeing “That is, the aging millennial population continues to rent,” says Doug Ressler, business intelligence manager at Yardi-Matrix, a commercial real estate data and research firm.
“It’s Not Just About Millennials, It’s Not Just About [Gen] jade [people under 24]”We also see that Boomers are making a difference,” he said. “Their percentage of moving into rental properties has been increasing over the past five years.”
According to Wrestler, there are several reasons why older people are opting for rentals.
“They’ve been living in a house for so long and they want to be able to reduce their spending on a fixed income,” he says. “They want to be in a social group, like a retirement community, and things where it’s more socially friendly for them.”
According to the National Association of Realtors (NAR), the asking price of apartment rentals was up 10.7% in September 2021 compared to the previous year.
“It is a hot market. We have never seen this market so hot in the last decade,” says Gay Corraton, NAR senior economist and director of housing and commercial research. “Average rent growth, year-over-year, is about 3-to-5%. We’re seeing 11% fare growth now, so, clearly, above the trends we’ve had in the past.
Tenants are feeling the squeeze as the COVID-19 pandemic caused supply chain issues, slowing home construction in the United States. Instead of the usual 5-to-6-month supply of single-family homes available, the supply dropped to less than two months in January 2021. The lack of housing supply means that Millennials are having a harder time buying a single-family home, which has been the traditional trajectory in the past.
“The entire building industry was beset with supply chain issues,” Corrotan says. “Shipment couldn’t come, the price of lumber was going up, construction was slow, workers couldn’t come [to work], so you lack the frame, the equipment. So, essentially, just a short supply. ”
According to Corrotan, housing supplies became even tighter during the pandemic as more investors poured their money into housing, while existing homeowners looked for other homes.
“With the pandemic, there was a huge demand for second-hand homes as well, for holiday homes. Typically, holiday homes account for about 5%. [of the market],” she says. “They jumped to about 8% earlier this summer. So again, home prices rose due to strong demand and a strong imbalance of demand and supply, making them less affordable. ”
The hottest rental markets right now are in the West and South. More renters are moving to Dallas and Houston in Texas, followed by Atlanta, Georgia; New York; Los Angeles; Austin, Texas; Phoenix, Arizona; and Washington, DC, according to NAR.
Corraton expects the coming year to be a little better but says the housing shortage is likely to continue for the next few years.
“You know, the old adage of moving from rental to homeownership, that whole polemic can change,” Resler says. “The sweet spot was always millennials, and now millennials are being replaced by [Gen] Z’s, but Millennials are living longer and Z’s are coming on board, and now you have a demographic of Boomers… what that means is a very profitable and dynamic [rental] The market is going to grow.”