15) How Millennials Are Changing the Housing Market
In this post-covid era, rising interest rates coupled with a highly competitive housing market have driven many more individuals to rent than previously seen. With millennials becoming the largest generation and entering their prime homebuying years, they account for 21% of the population in the United States while making up approximately 43% of homebuyers. This is creating unprecedented demand in the market, sending many looking for more affordable options. With the exorbitant prices associated with home ownership, rentals have increased in popularity, especially with those who are either reluctant to purchase a house or who were priced out of the market. This is appealing as the cost of ownership compared to renting is 31% higher; however, the deficit of millions of homes across the nation further fuels the demand for this market, making multi-family-style living an attractive middle ground for various audiences.
Millennials, along with Gen-X and baby boomers, have all seen a significant increase in the number of people that would rather rent instead of buying a house. When taking into consideration that Millennials are such a large consumer in the market and have reached their prime buying years, recent rent increases have not stopped the rapid expansion of their presence in rental properties. This trend will likely continue until the housing market cools down and interest rates lower.
This culmination of influences has created a thriving market for rentals regardless of generation. With traditional home buying “norms” thrown out the window, it opens many new possibilities for this industry. With the introduction of such a large generation becoming a fundamental aspect of the market and accounting for current demand, Millennials will be the driving force for the foreseeable future. Overall, with the deficit of housing, rentals will be a hot commodity for years to come due to their benefits for the price-conscious consumer, and with Gen-Z quickly catching up, who is to say when the fire will go out.