Why Millennials Aren’t Creating New Rental Households
Digested from “Apartment Demographics Study Shows Possible Millennial Pent-Up Demand”
Axiometrics (10/9/15) Ehmann, Chuck
Millennials have not created new rental households at the rate of previous generations: From 2006 to 2014, 18-to-34-year-olds created only 44,000 new households on average each year. This is partly because staggering student debt and a lagging job market have kept them living with either family or friends for affordability, but also because they've faced less pressure from parents to move out once they get on their feet.
So who is responsible for the low vacancy rates and increasing rents in the apartment industry?
Baby boomers (ages 55 to 74) who are downsizing or lost their homes to foreclosure played a large role in absorbing new rental supply. (Lagging supply from the Great Recession also played a part.) This generation created an average of 355,000 renter households per year over the same time frame, while Gen Xers (ages 35 to 54) created 288,000 new households.
But as more supply comes online, pent-up demand from aging millennials will be necessary to help maintain vacancy and rental metrics.