A trend that is not likely to change any time soon is the rental boom. As housing continues to be out of reach for most new buyers, the rental industry reaps the benefits.
What started in the Great Recession when millions lost their homes and were forced by financial constraints to move into smaller more affordable accommodations such as apartments has continued well beyond the historical norm. The percentage of households in America who own their own homes is still hovering at the low end. What was expected to last no more than a couple of years has become status quo.
So what is driving this trend? Despite the US economy adding jobs for more than a decade, most people are still choosing apartment dwelling to home ownership. Economists speculate on the reasons but have few answers.
In 2018’s second quarter the percentage of households who owned their home was at 64.3% a scant .9% better than the all-time low of 63.4% seen in 2015 and a far cry from the market high of 69% of 2004.
Not even the consumer-driven Generation -Z is stepping up to the home purchase plate. Previous decades saw the same age range purchasing houses in the 27% range and higher, that has now dropped to 22.6% and continues to fall despite better job markets and higher wages by comparison.
Much of this change can be attributed to differences in overall lifestyle trends. The youth of today is less likely to get married as young as previous generations, preferring to wait well into their 30’s to tie the knot. Along with delayed marriage comes longer wait times to start families and by proxy the need for a larger home.
Another more surprising lifestyle trend is the choice for this generation to live closer to their workplaces than to their parents/families, making city dwelling and apartments a more attractive option to the young adults. Proximity to social activities and friends has replaced the need for family security.
Metropolitan housing markets have responded by creating more and more popular urban dwelling spaces that attract these young adults leaving the suburbs leaving little room for any new single-family housing development.
Looming massive in the equation is the debt to income ratio that this generation is shouldering. While most are now graduates with degrees, they are also under heavy financial obligation from financing that education. Thus leaving them not only unwilling to add more debt but often unable to qualify for any additional debt.
The result of these factors, a booming rental market that is not likely to see an end anytime soon
