Multifamily Residential - A Demand Story
Sustainable Strong Demographic Shift
The multifamily apartment sector is experiencing significant demand driven by changing demographics. Millennials, the largest generation ever, are choosing to rent versus own and Baby Boomers, the second largest generation, are showing interest in downsizing after many years of living in their own homes.
|Generation||Ages||Size (Millions)||% of U.S. Population|
Source: US Census projections for 2013 based on 2010 Census. Barron’s, “On the Rise,” April 29, 2013.
Renters by Choice – Millennials and Baby Boomers
Millennials and Baby Boomers continue to rent by choice. A majority of newly formed households chose rental housing, a consistent trend since 2007.
Source: U.S. Census Bureau, Haver Analytics, 2015
Share of All U.S. Households that Rent
This represents the highest level since the mid 1960’s.
Source: America's Rental Housing, Joint Center for Housing Studies of Harvard University, 2015.
Millennials and Baby Boomers – A Landlord’s Delight
Why Millennials Prefer Renting:
- High levels of student debt *
- Desire for mobility to pursue job opportunities
- Mortgage lending standards continue to be restrictive
* Source: Federal Bank of New York, $1.2 trillion of debt as of 9/30/15.
Why Baby Boomers Prefer Renting:
- Ready to downsize - an easy first step to retirement living options
- Buying is often more expensive than renting
- Selling a home later in life can be stressful and is a disincentive for baby boomers
Overall Population Growth
Existing demographic data shows the population of the United States is slated to grow by 45 million over the next 20 years.
U.S. Population Projection
Source: U.S. Census Beureau.
Household Formations Trend Toward Renting
The growth in renter households reflects new households deciding to rent along with a growing number of households leaving homeownership.
Renter Household Growth Has Surged With the Drop in Homeownership
Note: Data as of 3Q 2015
Source: U.S. Census Beureau, Housing Vacancy Surveys.