Good news for rental real estate investors, according to a New York Times article Millennials are more apt to rent over buying. Here’s the scoop:
No Picket Fence: Younger Adults Opting to Rent, New York Times
Rent Versus Ownership
So why would Millennials look to renting over homeownership? A few reasons. First, they lived through the housing bust as teens or early twenty somethings and saw family members and friends get hurt by it. They watched people they cared about being stuck with homes they could no longer afford, but also couldn’t sell. It’s had an effect. Fewer are willing to take that risk regardless of whether the market has rebounded.
Millennials – Reasons To Rent
Other reasons also have to do with not having to be tied down to a mortgage, but not out of fear, but out of convenience. Renting means that moving due to a job or for whatever reason is much easier. There is a huge difference between a year lease and a 15, 20 or 30 year mortgage.
Apartment complexes are taking advantage of that and offering all kinds of amenities that homeownership may not: well appointed apartments, pools, fitness complexes, fire pits, waterfalls, units with things like built-in iPod docking station hard-wired to speakers that pipe music throughout the apartment and link to TVs, and more. Things that would cost way too much due to the type of home that would have those types of amenities.
Hard To Qualify
Another reason many Millennials don’t look at homeownership is because they can’t qualify for mortgages. High amounts of college debt and difficulty in finding higher paying jobs makes it difficult to qualify for a mortgage. Renting can give them the ability to save towards a home later in life. It also means that they have more spending money for things like the weddings they are attending of friends and family members their age.
For whatever reasons, Millennials are hesitant to join the ranks of homeowners. It may change as they mature, but for now, this is good news for rental real estate investors.