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It’s always been tough to be in your twenties. When you’re a kid, you think by the time you’re out of college for a few years you’ll already be making as much as your parents, already a superstar lawyer or astronaut or brilliant dinosaur-studying spy… Okay, maybe that last one was just me…
Regardless, I think it’s safe to say that dreams don’t come true quite that quickly for most of us, especially now, with young people graduating to find there aren’t many normal, intro-level positions, much less their dream jobs, just waiting for them on the other side.
So it’s no surprise that millennials are forgoing the classic American dream of home ownership, and, instead, flocking towards multi-family housing. An apartment gives them what they need, a roof over their head, without the burden of a mortgage, because, in many ways, this is all about that d-word they find oh-so terrifying: ‘debt.’. The last thing a new graduate wants, coming out of college already $100,000 in the red, is to pile on even more. And that’s if there’s even a loan to be had; it’s not like banks hand out mortgages the way they do those cheap suckers they keep in a bowl. You know the ones. I like the root-beer flavor.
Renting is becoming the new normal later into young-adulthood as big-time life changes are put off longer and longer. It’s a part of being young, really. Millennials want to live in cities. They want to be close to centers of culture, to music and entertainment, to business and educational opportunities. They want to live in places where they can get around easily, and cheaply, and where they can be surrounded by like-minded people in the same stage of life. And they want the flexibility to be able to pick everything up and move away, should an opportunity present itself. Add it all up and it’s not hard to see why so many are electing to rent.
And, of course, all this has an effect on vacancy rates. Tenants are not only renting more, but for longer periods of time, putting off that transition into home ownership. That’s why, everywhere you look, you’ll see new apartment buildings popping up, growing into the sky, piece by piece, like a game of Tetris, trying to take advantage of these trends.
But what about the buyer’s market? Is this a permanent shift in the housing paradigm? Is an entire generation of American’s going to skip what used to be such a seminal part of American life?
As my dad used to say, don’t pull your pants down before you get to the bathroom. Yeah. He has a way with words.
Yes, people are renting when their parents might have been buying. And, yes, that has meant fewer buyers, and less action in the sales market. But only for now.
People are putting off having families, taking on additional debt, as is often the responsible thing to do, but they’re not abandoning the ideas altogether. The time-frame has simply changed. Adulthood, as we might think of it, is deferred, but inevitable. They will develop careers and pay down debt. They’ll cohabitate, get married, have kids. They’ll do all the things people do as they grow up, and before they know it, it’ll be time to buy. Families need space, after all, and security. All that good stuff that was true of owning a home before is still true now, and once people have more certainty, they’ll make the change.
So, while things are booming in the rental sector now, anyone managing property would be wise to stay on their toes, to stay adaptable, ready to respond to this eventual shift in the marketplace. As the overflowing renters spill out into the buyers market, the winners will be the ones who can adapt their strategies to meet this generations changing needs.