Apartment Living – More Than a Trend, It’s a Way of Life

Two of the largest generations in the United States – Millennials and Baby Boomers – are changing the way they live.

As the rate of homeownership continues to decrease, the rate of apartment living continues to increase.

Multifamily

Homeownership

Millennials are now the largest generation in the United States. They will continue to be an important economic growth engine – and are fast becoming the renting generation.

1 U.S. Census Bureau 2014 Population Estimates.

Baby Boomers used to be the largest generation before Millennials came along. Baby Boomers are living longer, healthier lives. Many will choose multifamily residential living, as they downsize and watch their children begin their own lives.

The United States is experiencing a growing trend of a rentership society. Millennials are addicted to the freedom of renting over buying. With the availability of new services that provide products without the burdens of ownership, Baby Boomers, as they simplify life, should embrace this trend as well.

The must-haves for previous generations aren’t as important for Millennials. They’re putting off major purchases – or avoiding them entirely.2
  • Automobile

    • 5%

      I do not feel strongly about it

    • 15%

      Extremely Important

    • 25%

      I might purchase one if I really need it, but indifferent otherwise

    • 25%

      Important, but not a big priority

    • 30%

      I do not intend to purchase one in the near future

  • Television

    • 15%

      I might purchase if I really need it, but indifferent otherwise

    • 15%

      Extremely Important

    • 20%

      I do not feel strongly about it

    • 20%

      I do not intend to purchase one in the near future

    • 30%

      Important but not a big priority

  • Designer Handbag

    • 10%

      Extremely Important

    • 10%

      I might purchase if I really need it, but indifferent otherwise

    • 25%

      I do not feel strongly about it

    • 25%

      I do not intend to purchase one in the near future

    • 30%

      Important but not a big priority

2 Goldman Sachs. Fortnightly Thoughts Intern Survey. 2013.
Millennials are the first generation to come of age in the 21st century. They are a generation of individuals, and, being of the age of digital advances, they like to show it with selfies!

The Millennials are...

Millennials identify with a race or ethnicity other than non-Hispanic white twice as much as Baby Boomers at the same age. Many Millennials are immigrants or the children of immigrants and are drawn to the community and shared spaces in apartment buildings.

Race/Ethnicity in 20143

  • White
  • Hispanic
  • Black
  • Asian
  • Other
  • Adult Millennials
    (ages 18-33)
    57% 21 13 6 3
  • Gen X’ers
    (ages 34-39)
    61% 18 12 7 2
  • Boomers
    (ages 50-68)
    72% 10 11 5 2
  • Silents
    (ages 69-84)
    78% 8 8 4 1
3 Pew Research Center tabulations of the 2014 March Current Population Survey from the Integrated Public Use Microdata Series.

Millennials have come of age during a difficult economic time, and are on par with the generation that experienced the Great Depression when it comes to risk tolerance. They tend to allocate a high percentage of savings to cash accounts that pay little-to-no interest. Lack of investments with higher risk profiles that may generate higher returns make it difficult to save for a down payment on a house, leading to renting as a viable long-term option.5

Savings Breakdown6

Millennials vs. Everyone Else

5 Governance Studies at The Brookings Institution. How Millennials Could Upend Wall Street and Corporate America. May 2014. 6 WSJ. Chart of the Day. May 29, 2014.

Many Millennials are waiting longer to get married for financial reasons, and some are just taking time to “find themselves.” The median age of first marriage is now the highest in modern history. But Millennials aren't just putting off marriage; they're also waiting longer to have children. Why not stay in an apartment longer? They don’t need the additional space required for a growing family.7

The Decline in Marriage8
Among the Young

% married at age 18 to 32, by generation

  • Millennial (2013)
    26
  • Gen X (1997)
    36
  • Boomer (1980)
    48
  • Silent (1960)
    65
7Pew Research Center. Record Share of Americans Have Never Married. September 24, 2014. 8 Pew Research Center. Millennials in Adulthood. May 5, 2014.

Millennials are struggling with more debt than other generations. They show increases in the percentage that consistently carry credit card balances and the percentage reporting difficulty meeting household expenses on time each month.9 With cash management issues, qualifying for a mortgage may be challenging – adding to the reasons why two-thirds of Millennials are renters.10

  • Millennials carrying credit card balances
    37% in 2013
    51% in 2014
      Increase9
  • Millennials reporting difficulty meeting household expenses on time each month
    30% in 2013
    41% in 2014
      Increase9
9 PwC. Employee Financial Wellness Survey. April 2014. 10 Nielsen. Millennials: Breaking the Myths. 2014.

Although Millennials are more educated than previous generations, millions of them are unemployed. In debt and faced with some challenging economic conditions, Millennials have been forced to get creative with their careers – and embrace the freedom that comes with the entrepreneurial spirit. Many will relocate for a job opportunity, making the freedom of renting an apartment enticing.

  • of employed Millennials have started a side business to supplement income11

  • of Millennials might “reject” traditional business to work independently12

  • of Millennials classify themselves as entrepreneurs12

11 Iconoculture 2011/Edelman Digital. By the Numbers – 50 Facts About Millennials. 12 Deloitte. Big Demands and High Expectations. The Deloitte Millennial Survey. January 2014.

The Baby Boom generation, expected to account for 20% of American renters by 202013, is ushering in two decades of rapid growth in the senior population.

The Baby Boomers are...

Baby Boomers are drinking the proverbial ‘fountain of youth’. They are living longer, living better, and remaining engaged and active during their retirement years. As a first step to retirement living, apartments make basic cleaning and maintenance easier – and allow more time to do what you want to do.14

Average Life Expectancy after 65 Years15

  • 65 years
    17.7 years 82.7 years
  • 65 years
    20.3 years 85.3 years
Average life expectancy for a 65-year-old American is 17.7 additional years for a male and 20.3 additional years for a female. That represents three to four more years of life expectancy compared to what the prior generation had at the same age.16
13 Multifamily Executive Baby Boomers Want Space, Lifestyle Amenities in Apartments. July 29, 2015. 14 Huffington Post. The 7 Incredible Facts About Boomers’ Spending Power. March 17, 2015. 15 U.S. News & World Report. 12 Baby Boomer Retirement Trends. July 22, 2014.

Of those still working past the age of 65, over a third are employed at least part time – and continue to be independent.16 About 25% of Boomers have annual incomes of $100,000 or more and a net worth of $400,000 or more, helping support the lifestyle they are accustomed to.17 With so much time dedicated to work, the convenience of apartment living is attractive. Air conditioner isn’t working? Call the landlord.

Baby Boomer Employment by Gender: 201418

  • % Men working full-time, part-time, seeking work
  • % Women working full-time, part-time, seeking work
Age
13 Multifamily Executive Baby Boomers Want Space, Lifestyle Amenities in Apartments. July 29, 2015. 16 U.S. News & World Report. 12 Baby Boomer Retirement Trends. July 22, 2014. 17 South University. Booming Business for Aging Boomers. June 2013. 18 Gallup. Only a Third of the Oldest Baby Boomers in the U.S. Still Working. January 26, 2015.

Americans over 50 control 77% of total net worth and have nearly $46 trillion of wealth. As the largest group of adult Mass Affluent* population, Baby Boomers happily use their funds to indulge in services and amenities offered by high quality apartment residences.19

Distribution of the U.S. Mass
Affluent Segment, by Generation20

*Mass Affluent are households with $250,000 - $1 million in liquid assets, excluding real estate
  • Share of Total U.S. Mass Affluent Population (18+)
13 Multifamily Executive Baby Boomers Want Space, Lifestyle Amenities in Apartments. July 29, 2015. 19 U.S. News & World Report. How to Profit From Aging Baby Boomers. June 27, 2014. 20 Nielsen/Marketing Charts. December 4, 2014.

Not only do Boomers still make money, they spend money. This group accounts for 49% of total consumer package good sales. And, as they anticipate having more time in retirement, 67% of Baby Boomers plan to spend more time on their hobbies and interests, including their grandchildren.21 Renting is an optimal option for Boomers interested in living somewhere new or closer to family, even part of the year. Snow Bird, anyone?

The 50+ demographic is the #1 consumer-age demographic in the United States.22

Age 50+ 111 Million
Age 18-34 75 Million
Age 35-49 61 Million
13 Multifamily Executive Baby Boomers Want Space, Lifestyle Amenities in Apartments. July 29, 2015. 21 Nielsen and BoomAgers. Introducing Boomers. August 2012. 22 Huffington Post. The 7 Incredible Facts About Boomers' Spending Power. March 17, 2015.

Baby Boomers have been found to be particularly generous and are or will be asked to support family members – either aging parents or adult children. Also coined as the “Sandwich Generation,” regular disbursements of large amounts of cash may make Boomers rethink the purchase of another home – encouraging a lifestyle that involves renting.

  • 1/3 of people ages 18 to 34 regularly receive financial support from their parents23

  • 62% of people age 50+ provided financial support to a family member during the last 5 years24

  • $14,900: the average support for family members by those age 50+ during the last 5 years24

13 Multifamily Executive Baby Boomers Want Space, Lifestyle Amenities in Apartments. July 29, 2015. 23 Bank of America. Year-End Millennial Snapshot. 2015. 24 Merrill Lynch. Family & Retirement: The Elephant in the Room. 2013.

The United States is experiencing the lowest homeownership rate since 1967, at 63.4% as of the second quarter 2015. The homeownership rates were highest for those householders ages 65 years and over (78.5 percent) and lowest for the under 35 years of age group (34.8 percent).25

Homeownership Rate in Decline26

25 U.S. Census Bureau. Residential Vacancies and Homeownership in the Second Quarter 2015. July 28, 2015. 26 WSJ. U.S. Homeownership Rate Hits 48-Year Low. July 28, 2015.

The Conclusion

The decline in homeownership reflects a new trend: The number of rental households is growing.27

Millennials are having a significant impact on the nation's housing market through their unique views – views that personify renters.

Baby Boomers typically begin shifting from single-family homes between the ages of 70 and 75. As the second largest generation in the U.S., this trend will continue to have a great impact on the decline of the U.S. homeownership rate. This shift may even usurp young adults as the main driver of growth in apartment living and construction.28

Both Millennials and Baby Boomers are drawn to the community and conveniences provided by apartment living. Ranging from visible perks like electric car charging ports, gyms, and movie screening rooms, to the subtle, such as concierge service and wi-fi/Internet – a boon to Millennials, many of whom don’t have land lines – these two generations will continue to define the programs and amenities of successful apartment complexes for decades to come.

27 WSJ. U.S. Homeownership Rate Hits 48-Year Low. July 28, 2015. 28 Kansas City Fed. Generational Change Report. Winter 2014.