Following is an executive summary of Chris Lee's white paper:
U.S. population trends favor the apartment industry over the next two decades.
Four key reasons exist as to why the future of apartment living is bright, according to a white paper by Chris Lee, President, CEL & Associates. This paper is based on the current economic climate and expected growth in three demographics. Following are excerpts from the white paper, also available in the May issue of units magazine.
The Housing Crisis Solution
It is more than a remote possibility that the U.S. homeownership rate (currently 67.5 percent) could decline 6 percent to 8 percent over the next decade, bringing U.S. homeownership rates more in line with those in several European countries. Remember, only since the Baby Boomer generation of buyers has U.S. homeownership risen above 60 percent. For each single percentage point of decline in the homeownership rate, the potential demand for approximately 1 million rental-housing units is created. Recent statistics on renters moving out to buy homes during Q3 2008 were down as much as 15 percentage points from their highs in 2004. Today, only 12 percent to 14 percent of renters are leaving to buy homes—a number that is expected to decline further in the short-term. Renting is now becoming an economic and lifestyle choice.
Appealing to Gen Y
At nearly 85 million, the overall Generation Y population today is larger than that of today’s Baby Boomer Generation and many are at or nearing the ages when they become renters. Generation Y prefers urban living to suburban living. They are used to college-like living quarters and do not have enough savings or income to buy a home. Currently 57 percent of those under age 34 rent. Generation Y appears to put personal and professional development ahead of marriage. Postponing marriage until they are personally ready for it is clearly a continuing and growing trend for those with college degrees. Work-life balance is important to Generation Y, and most appear to want more personal time, so they are willing to pay more in housing to avoid long commutes and recapture that time.
Hispanic Population Chooses Apartments
In 2000, the United States was home to 35.3 million Hispanics. This ethnic group’s population is expected to jump to 49.7 million by 2010, 66.4 million by 2020 and 85.9 million by 2030. Fifty-four percent of U.S. population growth between 2000 and 2030 will be Hispanic. It is estimated that an additional 12 million or so Hispanics are in the United States illegally. According to a recent Pew Research Center study, 36 percent of Hispanics fear that their homes may go into foreclosure, and in 2006, Hispanics had taken out approximately 40 percent of all subprime loans. Overall, approximately 54 percent of Hispanics rent.
Fits Aging Population’s Needs
By 2010, some 40.2 million Americans will be age 65 and older. By 2020 and 2030, the number of U.S. residents age 65 and older increases to 54.8 million and 72.1 million, respectively. By 2050, the U.S. senior population is projected to be 86.7 million. The oldest population (those age 85 and above) is projected to double—from 4.7 million in 2003 to 9.6 million in 2030—and more than double to 20.9 million by 2050. The likelihood of renting increases as householders age. With increasing life expectancy, medical and wellness advances and more accessible healthcare services, the number of aging Americans will increase, creating new demands for senior housing.
To receive your complete, complimentary copy of the white paper, please contact Chris Lee at CEL & Associates, Inc. in Los Angeles at 310/571-3113 or chris@celassociates.com.