Right now, there are more renters than ever in the United States. And frankly, property managers are getting sick of the millennials. These 20-somethings are always walking around like they rent the place. Get it? We’re hilarious.
Millennials make up the majority of the nation’s renters. (And contrary to the joke, they make really good tenants.) In fact, 50% of all renters are under 30 years old, and it’s expected that many of them will put off buying a home. Let’s explore why so many people are renting.
1. Renting offers more flexibility
There’s an old argument that says renting is just a waste of money. Well, anyone who’s ever wanted to move or had a change in life circumstances knows that isn’t true. Renting offers a more flexible lifestyle.
So what’s the big deal with flexibility, anyway? For one, 35-40% of the workforce is in freelance. Many freelancers were pushed into their line of work by the 2008 recession. Many couldn’t buy a home without a stable source of income, so they rented instead.
The economy is now performing at an all-time high, and unemployment is low. However, it still makes sense to many workers, especially millennials, to keep their options open by renting.
Plus, flexibility allows people of all ages to live the life they want. They can move closer to work, become neighbors with their friends, enjoy that oceanfront property they’ve always longed for, etc.
But the renting boom isn’t just happening by choice. And that brings us to home prices.
2. Home prices are skyrocketing
In 2018, there were 3.6 million fewer families who were homeowners compared to 10 years prior. As the economy improved, home prices increased 75% faster than rental prices.
Even though renting is more expensive over time, down payments are simply too high for many first-time homeowners. Many millennials are content to rent for the time being.
Likewise, a rising number of baby boomers are selling their homes and renting instead. Why? Because renters don’t have to worry about maintenance and other costs related to ownership. They can sell their homes and use that money to rent. It’s a nice change of pace, especially for those with mobility issues or other needs that make home ownership a challenge.
3. Household income is not rising fast enough
The good news is that wages have been rising. The bad news is they haven’t gone up very much, and they only started rising at a national level since 2018. Some experts think this increase is due in part to laws increasing the minimum wage. That’s a problem for potential homebuyers in higher income brackets.
In short, people who could potentially buy a home are not the ones getting raises. And even if they did, those home prices are still very high. There are no easy answers to this problem, and that brings us to student debt.
4. Student debt is at an all-time high
Student loans get us through college and help us achieve our dreams. How will we ever repay them?
That’s a joke. This next part isn’t: American students owe $1.56 trillion in loans. Many graduate students have over $100,000 in loan debt. Combined with rising home prices and flattened salaries, all this debt is making it hard for young people to save money.
Is it any wonder home-buying just isn’t on the menu?
5. There’s a shortage of entry-level homes
According to RENTCafe, “Air-tight lending rules, an alarming shortage of entry-level homes and skyrocketing home prices [mean] fewer and fewer young families have a home to their name.” There are more renters than ever because for many, renting is the only affordable option.
This is an area where property managers can step in. By offering competitive rates and entry-level residences, you can appeal to more of the market. Attracting millennials is key to all of this. They are entering their home-buying years, but they can’t buy homes.
One thing about millennials: they see technology as efficiency. Use Yardi Breeze to automate basic processes like rent processing. Property management software will help you stay on top of maintenance requests, which will help keep your units filled.
And if you’re looking for a creative way to rise above your competition, consider being pet-friendly, and up your game with these pet amenities for apartment rentals.
Final thoughts on why there are more renters than ever
Let’s wrap up everything we covered on why there are more renters than ever. The bad news is that our post-recession economy has left many millennials out of the home-buying picture for now. The good news is that property managers should be able to attract those who would normally be buying their first homes.
And hey, we try to avoid slamming you with dry statistics. How about we switch things up and end with a joke about chemistry? Well, we would, but it probably wouldn’t get a reaction. You’re welcome.