The definition of the millennial generation is persons born between the early 80s and late 90s. By any definition, they’ve attained the age where they’re firmly established or entering their careers and are in a position to purchase a home.
Consequently, their needs and wants are currently a major force behind the trends in real estate. With a need for convenience, passion for flexibility, and love of community-based activities and amenities, more millennials are opting for rentals instead of homeownership. Here’s a look at why this generation is driving the rental market.
Mobility and Flexibility
Millennials have a strong desire for mobility and flexibility, so they value experiences rather than material possessions. Consequently, when a new adventure or employment opportunity emerges across the country or another side of the state, they want the liberty to respond.
The ultimate advantage of renting may emerge from the flexibility of moving for whatever reason, particularly career reasons. Millennials usually change occupations three times more frequently than their older counterparts do and maintain the same employer for only three years on average.
Therefore, renting instead of purchasing makes it easy to transfer to a better or new job. A number of leases may even incorporate a termination clause that identifies acceptable causes for early termination, for instance, a job transfer that’s over 50 miles away.
In some instances, the tenant may not be responsible for any payment in the event that the rental is re-rented within a particular period.
Homeownership Means More Debt Acquisition
Another reason millennials opt for a rental is the debt several have in the early 20s. Since 2008, the amount of debt (student loan) has increased an average of 6% and there’s no indication of this trend stopping.
With debt looming, it’s no surprise that millennials prefer a rental check over extra mortgage debt. Although mortgage payments can be more affordable compared to rent in some cities, fresh graduates probably lack the necessary funds to make a down payment.
Whether they’re saving for a down payment or opt to rent as a long-term decision, renting enables millennials to move out fast with the instant financial strain that accompanies homeownership.
Numerous apartment complexes feature free amenities that would ordinarily come at a considerable cost for homeowners. These range from obviously visible perks such as gyms and film screening rooms to the subtle, for instance, cell phone service and concierge service.
While former generations were content with a clubhouse, fully equipped gym and pool, millennials typically desire open spaces, which they can personalize for a brief period.
Millennials are attracted to the shared spaces and community in apartment complexes. With restricted budgets in urban settings, including areas where studio apartments can be less than 400sqft, younger renters are opting for common coffee bars or kitchens, recreation rooms, and libraries.
Furthermore, this generation enjoys the community outside the complex itself. Renting a downtown rental enables close proximity to enjoy nightlife and culture without having to relocate to the suburbs even if they were in a position to afford a home in a more residential area.
The growth in the rental market continues as signs indicate that millennials will use rent as a strategy for years to come. With millennials composing most of the new rental market, their significance to the construction industry can’t be overstated.
If you’re wondering why the millennial generation opts for rentals than homeownership, this post will enlighten you.
For more information on apartment millennial boom, contact us at Apartment Agents or leave a comment.