Millennials are generally defined as the generation who are now in their 20s or early 30s.
At these ages, these young adults are graduating college, building their careers, and getting married and starting families. Historically it was an age when people stopped renting or moved out of their parents’ house and looked to purchase their first home. However, Millennials have demonstrated an unwillingness to buy a home, which could be a great benefit to landlords and real estate investors.
Several key factors for Millennial’s preference to rent:
Flexibility – Renting allows people to move without being encumbered with a house to sell, and Millennials exhibit a willingness to move.
Based on a Harris Poll conducted between 11/11/15 and 11/16/15, 68% of Millennials would relocate for a job (as compared to 41% for older generations). They are also regularly looking for those new job opportunities. According to the Bureau of Labor Statistics, young adults are expected to stay with a company for less than 3 years on average. That could mean more than 15 different companies throughout their entire career, which would lead to many opportunities to change residence.
Tepid Economy – With a weak job market and almost no wage improvement, Millennials are having a hard time saving and building the required credit score. They tend to be saddled with a heavy debt load, much of it in the form of student loans. The more restrictive mortgage guidelines around credit scores and down payments make it tough for this age group to qualify for a starter home, even if they wanted to buy.
Fear – Many young adults witnessed what happened to their parents or their friends parents following the Great Recession. People went through foreclosures, homes lost value and many families experienced tremendous economic strife.
Because of these factors, many Millennials will decide it’s easier and safer to rent. They won’t have to deal with property taxes, mortgages or ongoing maintenance. They will be able to remain flexible when the right job opportunity appears and feel more financially secure. All this can help keep vacancy rates low and means landlords can keep properties rented.