When the largest segment of the U.S. population has spending power that equates to over $200 billion, it has the potential to greatly affect the economy. The Millennial Generation, those roughly between the ages of 18 – 35 years old, are currently the largest population segment, and have just recently over taken the Baby Boomer generation. The number of Baby Boomers is shrinking while the Millennial generation is finding additional strength in numbers with numerous Millennials immigrating to the U.S in search of the American Dream.
While this generation is altering economic trends across the board, one of the most significant trends Millennials are shaping is the real estate market.
Millennials and Real Estate
Whereas previous generations were looking to save their capital and own a home, Millennials are choosing to rent properties instead. This is partially a result of a generational delay in entering the workforce, as well as the higher amounts of college debt they are saddled with. Additionally, a large majority of Millennials are choosing to get married and start families later in life, especially when compared to previous generations.
As a whole, American homeownership has been trending downwards for years. The U.S. Census Bureau has recorded homeownership levels at 63.7%; the lowest it has been in decades. Of the 1.4 million new households that are projected to form this year, 1.3 million of those are expected to be renters. This increase, combined with the fact that the majority of new household formations are made up of Millennials, means the rental market is in for a huge increase.
The Future of Real Estate
What does this increasing renter population mean for the future of real estate? As demand for rental properties increases, this puts pressure on the overall supply of available rentals on the market. The quantity of rentals available versus the number of rentals occupied has been on a downward trend for years. In fact, it is hitting levels not seen in decades. Overall these factors are leading to an increase in monthly rents, with median rent levels hitting new highs.
Don’t Miss out on These Market Conditions
Single family rentals are increasing in demand, and when purchased in the right markets, investors are finding profits through monthly cash flow and appreciation. HomeUnion is helping investors take advantage of these optimal conditions by providing a means to find, acquire, and manage cash flow-proven properties in strategic markets throughout the country.